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This is a Bill, not an Act. For current law, see the Acts databases.
Western Australia
DRAFT BILL FOR PUBLIC COMMENT
The Government proposes to provide a legislative
framework for the formation, registration and
management of co-operatives and for related
purposes.
This draft Bill has been prepared for public
comment but it does not necessarily represent the
Government's settled position.
Co-operatives Bill 2006
CONTENTS
Part 1 -- Preliminary
Division 1 -- Introductory
1. Short title 2
2. Commencement 2
3. Objects of this Act 2
4. Terms used in this Act 3
Division 2 -- Qualified privilege
5. Qualified privilege 8
Division 3 -- The co-operative principles
6. Co-operative principles 8
7. Interpretation to promote co-operative principles 10
Division 4 -- Application of Corporations Act
to co-operatives
8. Definitions 10
160--1 page i
Co-operatives Bill 2006
Contents
9. Excluded matter 11
10. Applying the Corporations legislation to
co-operatives 13
11. Modifications to applied provisions 14
Part 2 -- Formation
Division 1 -- Types of co-operatives
12. Types of co-operatives 15
13. Trading co-operatives 15
14. Non-trading co-operatives 15
Division 2 -- Formation meeting
15. Formation meeting 16
Division 3 -- Approval of disclosure statement
and rules
16. Approval of disclosure statement 17
17. Approval of rules 19
Division 4 -- Registration of proposed
co-operative
18. Application for registration of proposed
co-operative 20
19. Registration of co-operative 22
20. Incorporation and certificate of registration 22
Division 5 -- Registration of an existing
corporation
21. Existing corporation can be registered 23
22. Formation meeting and transitional provision 23
23. Application for registration 24
24. Requirements for registration 25
25. Transitional provision 26
26. Certificate of registration 26
27. Effect of registration 26
Division 6 -- Conversion of co-operative
28. Conversion of co-operative 27
Division 7 -- Reviews
29. Appeal against refusal to approve disclosure
statement 27
30. Appeal against refusal to approve draft rules 27
31. Appeal against refusal to register 27
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Co-operatives Bill 2006
Contents
32. Supreme Court's powers on appeal 28
Division 8 -- General
33. Acceptance of money by proposed co-operative 28
34. Issue of duplicate certificate 28
Part 3 -- Legal capacity and powers
Division 1 -- General powers
35. Effect of incorporation 29
36. Power to form companies and enter into joint
ventures 29
Division 2 -- Doctrine of ultra vires abolished
37. Interpretation 29
38. Doctrine of ultra vires abolished 30
39. Legal capacity 30
40. Restrictions on co-operatives in rules 31
41. Results of contravention of restriction in rules 32
Division 3 -- Persons having dealings with
co-operatives
42. Assumptions entitled to be made 33
43. Assumptions 33
44. Person who knows or ought to know is not entitled
to make assumptions 34
45. Lodgment of documents not to constitute
constructive knowledge 35
46. Effect of fraud 35
Division 4 -- Authentication and execution of
documents and confirmation of contracts
47. Common seal 36
48. Official seal 36
49. Authentication need not be under seal 36
50. Co-operative may authorise person to execute deed 36
51. Execution under seal 37
52. Contractual formalities 37
53. Other requirements as to consent or sanction not
affected 38
Division 5 -- Pre-registration contracts
54. Contracts before registration 38
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Co-operatives Bill 2006
Contents
55. Person may be released from liability but is not
entitled to indemnity 39
56. This Division replaces other rights and liabilities 40
Part 4 -- Membership
Division 1 -- General
57. Becoming a member 41
58. Members of co-operative group 41
59. Qualification for membership and transitional
provision 42
60. Membership may be joint 42
61. Members under 18 years of age 43
62. Representatives of corporations 43
63. Notification of shareholders and shareholdings 43
64. Circumstances in which membership ceases -- all
co-operatives 44
65. Additional circumstances in which membership
ceases --co-operatives with share capital 45
66. Carrying on business with too few members 45
Division 2 -- Rights and liabilities of members
67. Rights of membership not exercisable until
registered etc. 46
68. Liability of members to co-operative 46
69. Co-operative to make information available to
person intending to become a member 47
70. Entry fees and regular subscriptions 47
71. Members etc. may be required to deal with
co-operative 48
72. Fines payable by members 49
73. Charge and set off of co-operative 49
74. Repayment of shares on expulsion 50
Division 3 -- Death of member
75. Meaning of "interest" 51
76. Transfer of share or interest on death of member 52
77. Transfer of small shareholdings and interests on
death 52
78. Value of shares and interests 53
79. Co-operative protected 53
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Co-operatives Bill 2006
Contents
Division 4 -- Disputes involving members
80. Grievance procedure 53
81. Application to Supreme Court 54
Division 5 -- Oppressive conduct of affairs
82. Interpretation 54
83. Application of Division 55
84. Who may apply for court order 55
85. Orders that the Supreme Court may make 55
86. Basis on which Supreme Court makes orders 56
87. Winding up need not be ordered if oppressed
members prejudiced 57
88. Application of winding up provisions 57
89. Changes to rules 57
90. Copy of order to be lodged with Registrar 58
Division 6 -- Proceedings on behalf of a
co-operative by members and others
91. Bringing, or intervening in, proceedings on behalf
of a co-operative 58
92. Applying for and granting leave 59
93. Substitution of another person for the person
granted leave 59
94. Effect of ratification by members 60
95. Leave to discontinue, compromise or settle
proceedings brought, or intervened in, with leave 61
96. General powers of the Supreme Court 61
97. Power of Supreme Court to make costs order 62
Part 5 -- Rules
98. Effect of rules 63
99. Content of rules 63
100. Purchase and inspection of copy of rules 64
101. False copies of rules 64
102. Model rules 64
103. Rules can only be altered in accordance with this
Act 65
104. Approval of alteration of rules 65
105. Alteration by special resolution 66
106. Alteration by resolution of board 66
107. Alteration does not take effect until registered 67
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Co-operatives Bill 2006
Contents
108. Appeal against refusal to approve alteration 67
109. Appeal against refusal to register 67
110. Supreme Court's powers on appeal 67
Part 6 -- Active membership
Division 1 -- Definitions
111. Meaning of "active membership resolution" 68
112. What is active membership 68
113. What are active membership provisions and
resolutions 68
Division 2 -- Rules to contain active
membership provisions
114. Number of primary activities required 69
115. Rules to contain active membership provisions 69
116. Factors and considerations for determining primary
activities etc. 69
117. Active membership provisions -- trading
co-operatives 70
118. Regular subscription -- active membership of
non-trading co-operative 70
Division 3 -- Active membership resolutions
119. Notice of meeting 71
120. Eligibility to vote on active membership resolution 71
121. Eligibility of directors to vote on proposal at board
meeting 72
122. Other entitlements of members not affected 72
Division 4 -- Cancellation of membership of
inactive or missing members
123. Cancellation of membership of inactive or missing
member and transitional provision 72
124. Share to be forfeited if membership cancelled 73
125. Failure to cancel membership -- offence by
director 74
126. Deferral of forfeiture by board 74
127. Cancellation of membership prohibited in certain
circumstances 75
128. Notice of intention to cancel membership 75
129. Order of Supreme Court against cancellation 76
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Co-operatives Bill 2006
Contents
130. Repayment of amounts due because of cancelled
membership 76
131. Interest on deposits, debentures and co-operative
capital units 78
132. Repayment of deposits, and redemption of
debentures and co-operative capital units 79
133. Register of cancelled memberships 80
Division 5 -- Entitlements of former members
of trading co-operatives
134. Application of Division 80
135. Former shareholders to be taken to be shareholders
for certain purposes 80
136. Entitlements of former shareholders on mergers
etc. 81
137. Set off of amounts repaid etc. on forfeited shares 82
138. Entitlement to distribution from reserves 83
139. Regulations may exempt co-operatives from
provisions 84
Part 7 -- Shares
Division 1 -- Nature of share
140. Nature of share in co-operative 85
Division 2 -- Disclosure
141. Disclosure to intending shareholders in trading
co-operative 85
142. Content of disclosure statement to intending
shareholders 86
143. Exemptions for disclosure statements 87
Division 3 -- Issues of shares
144. Shares -- general 87
145. Application of Corporations Act for particular
share subscriptions 88
146. Minimum paid up amount 88
147. Shares not to be issued at a discount 89
148. Issue of shares at a premium 89
149. Joint ownership of shares 90
150. Members may be required to take up additional
shares 90
151. Bonus share issues 91
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Co-operatives Bill 2006
Contents
152. Restrictions on bonus shares 91
153. Notice about bonus shares 92
Division 4 -- Beneficial and non-beneficial
interest in shares
154. Direction to disclose 93
155. Disclosure by member of relevant interests and
instructions 93
156. Registration as trustee etc. on death of owner of
shares 94
157. Registration as administrator of estate on
incapacity of shareholder 95
158. Registration as Official Trustee in Bankruptcy 95
159. Liabilities of person registered as trustee or
administrator 96
160. Notice of trusts in register of members 96
161. No notice of trust except as provided by this
Division 96
Division 5 -- Sale or transfer of shares
162. Sale or transfer of shares 96
163. Transfer on death of member 97
164. Restriction on total shareholding 97
165. Transfer not effective until registered 98
166. Non-members become members on registration 98
Division 6 -- Repurchase of shares
167. Purchase and repayment of shares 98
168. Deposit, debentures or co-operative capital units
instead of payment when share repurchased 99
169. Cancellation of shares 101
Part 8 -- Voting and meetings
Division 1 -- Voting entitlements
170. Application of Part to voting 102
171. Voting 102
172. Voting by proxy 102
173. Inactive members not entitled to vote and
transitional provision 103
174. Control of the right to vote 103
175. Effect of disposal of shares on voting rights 103
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176. Effect of relevant share and voting interests on
voting rights 104
177. Rights of representatives 104
178. Other rights and duties of members not affected by
ineligibility to vote 104
179. Vote of disentitled member to be disregarded 104
Division 2 -- Resolutions
180. Decisions to be by ordinary resolution 105
181. Ordinary resolutions 105
182. Special resolutions 105
183. How majority obtained is ascertained 106
184. Declaration of passing of special resolution 106
185. Effect of special resolution 106
186. Lodgment of special resolution 106
187. Decision of Registrar on application to register
special resolution 107
Division 3 -- Resolution by circulated document
188. Application of Division 3 108
189. Resolution by circulation of document -- fewer
than 50 members 108
Division 4 -- Postal ballots
190. Postal ballots 109
191. Special postal ballots 110
192. When a special postal ballot required 111
193. Holding of postal ballot on requisition and
transitional provision 111
194. Expenses involved in postal ballots on requisition 112
Division 5 -- Meetings
195. Annual general meetings 113
196. Special general meetings 113
197. Notice of meetings 113
198. Quorum at meetings 114
199. Decision at meetings 114
200. Calling of general meeting on requisition and
transitional provision 114
201. Minutes 116
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Co-operatives Bill 2006
Contents
Part 9 -- Management and
administration of co-operatives
Division 1 -- The Board
202. Board of directors 117
203. Election of directors 117
204. Qualification of directors 118
205. Disqualified persons 119
206. Meeting of the board of directors 121
207. Transaction of business outside meetings 122
208. Deputy directors 122
209. Delegation by board 123
210. Removal from and vacation of office 123
Division 2 -- Secretary
211. Secretary 124
Division 3 -- Duties and liabilities of directors,
officers and employees
212. Meaning of "officer" 124
213. Officers must act honestly 125
214. Standard of care and diligence required 126
215. Improper use of information or position 126
216. Recovery of damages by co-operative 127
217. Other duties and liabilities not affected 127
218. Application of Corporations Act concerning
indemnities and insurance for officers and auditors 127
219. Application of Corporations Act provisions
concerning officers of co-operatives 128
Division 4 -- Restrictions on directors and
officers
220. Directors' remuneration 128
221. Certain financial accommodation to officers
prohibited 129
222. Financial accommodation to directors and
associates 129
223. Restriction on directors of certain co-operatives
selling land to co-operative 132
224. Management contracts 132
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Contents
Division 5 -- Declaration of interests
225. Declaration of interest 133
226. Declarations to be recorded in minutes 135
227. Division does not affect other laws or rules 135
228. Certain interests need not be declared 135
Division 6 -- Financial reports and audit
229. Meaning of "control" and "entity" 136
230. Requirements for financial records and financial
reports 136
231. Power of Registrar to grant exemptions 138
232. Disclosure by directors 138
233. Protection of auditors etc. 138
234. Financial year 139
Division 7 -- Registers, records and returns
235. Registers to be kept by co-operatives 139
236. Location of registers 140
237. Inspection of registers etc. 141
238. Use of information on registers 142
239. Notice of appointment etc. of directors and officers 143
240. Annual report to be lodged with Registrar 144
241. List of members to be provided at request of
Registrar 145
242. Special return to be given at request of Registrar 145
Division 8 -- Name and registered office
243. Name to include certain matter 145
244. Use of abbreviations 146
245. Name to appear on business documents etc. 146
246. Change of name of co-operative 147
247. Restriction on use of word "co-operative" or
similar words 148
248. Registered office of co-operative 148
Part 10 -- Funds and property
Division 1 -- Power to raise money
249. Meaning of obtaining financial accommodation 149
250. Fund raising to be in accordance with Act and
regulations 149
251. Limits on deposit taking 149
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Contents
252. Members etc. not required to see to application of
money 149
253. Registrar's directions about fundraising 150
254. Subordinated debt 150
255. Application of Corporations Act to issues of
debentures 151
256. Application of Corporations to particular issues of
debentures 152
257. Disclosure statement 153
258. Approval of board for transfer of debentures 153
259. Application of Corporations Act -- reissue of
redeemed debentures 154
260. Compulsory loan by member to co-operative 154
261. Interest payable on compulsory loan 155
Division 2 -- Co-operative capital units
262. General nature of co-operative capital units 156
263. Priority of CCU's on winding up 157
264. Financial accommodation provisions apply to issue
of CCUs 157
265. CCUs to be issued to non-members 158
266. Minimum requirements for rules concerning CCUs 158
267. CCUs not to be issued unless terms of issue
approved by Registrar 158
268. Directors' duties concerning CCUs 159
269. Redemption of CCUs 160
270. Capital redemption reserve 160
271. Issue of shares in substitution for redemption 161
Division 3 -- Charges
272. Registration of charges 161
Division 4 -- Receivers and other controllers of
property of co-operatives
273. Receivers and other controllers of property of
co-operatives 161
Division 5 -- Disposal of surplus from activities
274. Retention of surplus for benefit of co-operative 162
275. Application for charitable purposes or members'
purposes 162
276. Distribution of surplus or reserves to members 162
277. Application of surplus to other persons 163
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Division 6 -- Acquisition and disposal of assets
278. Acquisition and disposal of assets 164
Part 11 -- Restrictions on the
acquisition of interests
in co-operatives
Division 1 -- Restrictions on share and voting
interests
279. Application of Part 166
280. Notice required to be given of voting interest 166
281. Notice required to be given of substantial share
interest 166
282. Requirements for notices 167
283. Maximum permissible level of share interest 167
284. Transitional provision 168
285. Shares to be forfeited to remedy contravention 168
286. Powers of board in response to suspected
contravention 169
287. Powers of Supreme Court in relation to
contravention 169
288. Co-operative to notify Registrar of interest over
20% 170
289. Co-operative to keep register 171
290. Unlisted companies to provide list of shareholders
etc. 171
291. Excess share interest not to affect loan liability 172
292. Extent of operation of Division 172
293. Registrar may grant exemption from Division 172
Division 2 -- Restrictions on certain share
offers
294. Share offers to which Division applies 173
295. Requirements to be satisfied before offer can be
made 173
296. Some offers totally prohibited if they discriminate 173
297. Offers to be submitted to board first 174
298. Announcements of proposed takeovers concerning
proposed company 174
299. Additional disclosure requirements for offers
involving conversion to company 176
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300. Consequences of prohibited offer 176
301. Registrar may grant exemptions 177
Part 12 -- Merger, transfer of
engagements, winding up
Division 1 -- Mergers and transfers of
engagements
302. Application of Division 178
303. Mergers and transfers of engagements of local
co-operatives 178
304. Requirements before application can be made 178
305. Disclosure statement required 178
306. Making an application 180
307. Approval of merger 180
308. Approval of transfer of engagements 181
309. Transfer of engagements by direction of Registrar 181
Division 2 -- Transfer of incorporation
310. Application for transfer 182
311. Requirements before application can be made 183
312. Meaning of "new body" and "transfer" 183
313. New body ceases to be registered as co-operative 184
314. Transfer not to impose greater liability etc. 184
315. Effect of new certificate of registration 184
316. New body must give copy of new certificate of
registration or incorporation to Registrar 185
317. New body is a continuation of the co-operative 185
Division 3 -- Winding up and deregistration
318. Methods of winding up 185
319. Winding up on Registrar's certificate 185
320. Method of deregistration 186
321. Application of Corporations Act to winding up and
deregistration 186
322. Restrictions on voluntary winding up 188
323. Start of members' voluntary winding up 188
324. Distribution of surplus -- non-trading
co-operatives 188
325. Liquidator -- vacancy may be filled by Registrar 189
326. Review of liquidator's remuneration 189
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327. Liability of member to contribute in a winding up
where shares forfeited etc. 189
Division 4 -- Administration of co-operative --
application of Corporations Act
328. Application of Corporations Act to administration
of co-operative 190
Division 5 -- Appointment of administrator
329. Appointment of administrator 191
330. Effect of appointment of administrator 191
331. Revocation of appointment 192
332. Expenses of administration 193
333. Liabilities arising from administration 193
334. Additional powers of Registrar 194
335. Stay of proceedings 195
336. Administrator to report to Registrar 195
Division 6 -- Effect of merger etc. on property,
liabilities etc.
337. How this Division applies to a merger 195
338. How this Division applies to a transfer of
engagements 196
339. How this Division applies to a transfer of
incorporation 196
340. Effect of merger etc. on property, liabilities etc. 196
Division 7 -- Miscellaneous
341. Grounds for winding up, transfer of engagements,
appointment of administrator 198
342. Application of Corporations Act for insolvent
co-operatives 199
Part 13 -- Arrangements and
reconstructions
Division 1 -- General requirements
343. Requirements for binding compromise or
arrangement 200
344. Supreme Court ordered meeting of creditors 201
345. Registrar to be given notice and opportunity to
make submissions 201
346. Results of 2 or more meetings 202
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Contents
347. Persons disqualified from administering
compromise etc. 202
348. Application of Schedule 4 to person appointed 203
349. Application of Corporations Act to person
appointed 203
350. Copy of order to be attached to rules 203
351. Directors to arrange for reports 204
352. Power of Supreme Court to restrain further
proceedings 204
353. Supreme Court need not approve compromise or
arrangement takeovers 205
Division 2 -- Explanatory statements
354. Explanatory statement required to accompany
notice of meeting etc. 205
355. Requirements for explanatory statement 207
356. Contravention of Division -- offence by
co-operative 207
Division 3 -- Facilitating reconstructions and
mergers
357. Provisions for facilitating reconstructions and
mergers 208
Division 4 -- Acquisition of shares of dissenting
shareholders
358. Definitions 210
359. Schemes and contracts to which Division applies 210
360. Acquisition of shares pursuant to notice to
dissenting shareholder 210
361. Restrictions when excluded shares exceed 10% 211
362. Remaining shareholders may require acquisition 212
363. Transfer of shares pursuant to compulsory
acquisition 213
364. Disposal of consideration for shares compulsorily
acquired 214
Division 5 -- Miscellaneous
365. Notification of appointment of scheme manager 215
366. Power of Supreme Court to require reports 215
367. Effect of out-of-jurisdiction compromise or
arrangement 216
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Contents
368. Jurisdiction to be exercised in harmony with
Corporations Act jurisdiction 216
369. Registrar may appear etc. 216
Part 14 -- Mutual recognition
Division 1 -- Introductory
370. Definitions 217
371. What constitutes carrying on business 217
372. Co-operatives law 218
373. Excluded matter 219
Division 2 -- Mutual recognition of foreign
co-operatives
374. Operation of foreign co-operatives in this State 220
375. Authorisation to carry on business 221
376. Registration under Companies (Co-operative)
Act 1943 221
377. Notification to Registrar 221
378. Authorisation notices for participating
co-operatives 223
379. Authorisation notices for non-participating
co-operatives 223
380. Name of foreign co-operative 223
381. When foreign co-operative not authorised to carry
on business 224
382. Withdrawal of authority to carry on business 224
383. Appeals 225
384. Application of Act and regulations to foreign
co-operatives 226
Division 3 -- General
385. Name and place of origin to appear on business
and other documents 226
386. Supply of information to participating Registrars 227
387. Registrar to be notified of changes 227
388. Cessation of business 227
389. Functions conferred on Registrar under
co-operatives law 228
Division 4 -- Winding up of foreign
co-operatives in this State
390. Winding up to relate to State activities 228
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Contents
391. Supreme Court may order winding up 229
392. Application of Corporations Act to winding up of
foreign co-operatives 229
393. Outstanding property of foreign co-operative 230
Division 5 -- Mergers and transfers of
engagements
394. Definitions 231
395. Authority for merger or transfer of engagements 231
396. Requirements before application can be made 231
397. Disclosure statement required 233
398. Making an application 234
399. Approval of merger 235
400. Approval of transfer of engagements 236
401. Effect of merger or transfer of engagements 237
402. Division applies instead of certain other provisions
of this Act 239
Part 15 -- Supervision and protection
of co-operatives
Division 1 -- Supervision and protection
403. Definitions 240
404. "Co-operative" includes subsidiaries, foreign
co-operatives and co-operative ventures 240
405. Appointment of inspectors 241
406. Registrar and investigators have functions of
inspectors 241
407. Inspector's identity card 241
408. Production or display of inspector's identity card 242
409. Powers of inspector 242
410. Inspector's appointment conditions 242
411. Entry of place 243
412. Consent to entry 243
413. Inspectors may require certain persons to appear,
answer questions and produce documents 244
414. Powers of inspectors on place entered 245
415. Functions of inspectors in relation to relevant
documents 246
416. Protection from incrimination 246
417. Warrants 247
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418. Warrants -- applications made other than in
person 248
419. Entry with warrant 249
420. General powers after entering places 250
421. Power to seize evidence 251
422. Receipt for seized things 251
423. Return of seized things 252
424. Power to require name and address 252
425. False or misleading statements 253
426. Power to require production of documents 253
427. False or misleading documents 254
428. Obstruction of inspectors 254
429. Copies or extracts of records to be admitted in
evidence 255
430. Privilege 255
Division 2 -- Inquiries
431. Definitions 256
432. Appointment of investigators 257
433. Powers of investigators 258
434. Examination of involved person 259
435. Privilege 259
436. Offences by involved person 260
437. Offences relating to documents 261
438. Record of examination 261
439. Report of investigator 262
440. Proceedings following inquiry 263
441. Admission of investigator's report as evidence 263
442. Costs of inquiry 264
Division 3 -- Prevention of fraud etc.
443. Falsification of records 265
444. Fraud or misappropriation 265
445. Offering or paying commission 265
446. Accepting commission 266
447. False statements in loan application etc. 266
Division 4 -- Miscellaneous powers of the
Registrar
448. Application for special meeting or inquiry 267
449. Holding of special meeting 267
450. Expenses of special meeting or inquiry 268
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451. Power to hold special inquiry into co-operative 268
452. Special meeting following inquiry 268
453. Information and evidence 268
454. Extension or abridgment of time 269
455. Power of Registrar to intervene in proceedings 269
Part 16 -- Administration of this Act
Division 1 -- The Registrar
456. Registrar of Co-operatives 270
457. Deputy Registrar and other staff 270
458. Delegation by Registrar 270
459. Registers to be kept by Registrar 271
460. Keeping of registers 271
461. Disposal of records by Registrar 271
462. Inspection of registers 272
463. Approvals by Registrar 273
464. Lodgment of documents 273
465. Way of lodging 273
466. Power of Registrar to refuse to register or reject
documents 274
Division 2 -- Protection from liability
467. Particular persons protected from liability 274
Division 3 -- Evidence
468. Certificate of registration 275
469. Certificate evidence 275
470. Records kept by co-operatives 276
471. Minutes 276
472. Official certificates 277
473. The Registrar and proceedings 277
474. Rules 277
475. Registers 277
Division 4 -- Enforceable undertakings
476. Undertakings following contravention of, or failure
to comply with, this Act 278
477. Register of undertakings 278
478. Enforcement orders 279
Part 17 -- Offences and proceedings
479. Offences by officers of co-operatives 281
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480. Notice to be given of conviction for offence 281
481. Secrecy 281
482. False or misleading statements 284
483. Further offence for continuing failure to do
required act 285
484. Civil remedies 286
485. Injunctions 286
486. Proceedings for offences etc. 288
Part 18 -- General
487. Co-operative ceasing to exist 289
488. Service of documents on co-operative 289
489. Service on member of co-operative 290
490. Reciprocal arrangements 290
491. Translations of documents 291
492. Exemptions may be on conditions 291
493. Approval of forms 291
494. Regulation making power 291
495. Companies (Co-operative) Act 1943 repealed 292
496. Co-operative and Provident Societies Act 1903
repealed 292
497. Transitional and savings provisions 292
498. Consequential amendments 292
Schedule 1 -- Matters for which rules
must make provision
1. Requirements for all co-operatives 293
2. Additional matters -- co-operatives with share
capital 294
3. Additional matters -- non-trading co-operatives 295
Schedule 2 -- Relevant interests,
associates, related bodies
Division 1 -- Relevant interests
1. Terminology used in this Schedule 296
2. Basic rules -- relevant interests 296
3. Control of corporation having power in relation to
a share 296
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4. Control of 20% of voting power in corporation
having power in relation to a share 297
5. Deemed relevant interest in advance of
performance of agreement that will give rise to a
relevant interest 297
6. Control of corporation having a relevant interest by
virtue of clause 5 298
7. Matters not affecting application of Division 298
8. Corporation may have a relevant interest in its own
shares 299
9. Exclusions -- money lenders 299
10. Exclusions -- certain trustees 299
11. Exclusions -- instructions to securities dealer to
dispose of share 300
12. Exclusions -- honorary proxies 300
13. Exclusions -- holders of prescribed offices 300
14. Prescribed exclusions 300
15. Effect of Schedule 300
16. Relevant interest -- corporation other than
co-operative 301
Division 2 -- Associates
17. Effect of Part 301
18. Associates of a corporation 301
19. Matters relating to voting rights 301
20. General 302
21. Exclusions 303
Division 3 -- Related corporations
22. Related corporations 303
Schedule 3 -- Registration etc. of
charges
Division 1 -- Preliminary
1. Interpretation 304
2. Application to charges referred to in clause 17 305
3. Lodgment of documents 305
Division 2 -- Registration
Subdivision 1 -- Charges
4. To which charges does Schedule apply? 305
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Co-operatives Bill 2006
Contents
5. Excluded charges 306
6. Personal chattels 307
7. Book debts 307
8. Crops or stock 308
9. Deposit of documents of title 308
10. Charges on land or fixtures on land 308
11. What if other property is also charged? 308
12. Effect of failure to lodge or give notice or
document 308
Subdivision 2 -- Notice of charge
13. Lodgment of notice of charge and copy of
instrument, and transitional provision 309
14. Series of debentures 310
15. Operation of priority provisions in respect of issue
of debentures 310
16. Discounts 311
17. Acquisition of property subject to charge 311
Subdivision 3 -- Registration
18. Register of Co-operative Charges 312
19. Registration of documents relating to charge 312
20. Provisional registration if stamp duty not paid 313
21. Provisional registration if required particulars not
supplied 314
22. Effect of provisional registration 316
23. What if 2 or more charges relate to the same
property? 316
24. Registration of assignment or variation of charge 316
25. Standard time for the purposes of this Subdivision 317
Subdivision 4 -- Certain charges void against
liquidator or administrator
26. Definitions 317
27. Certain charges void against liquidator or
administrator 317
28. Certain varied charges void against liquidator or
administrator 319
29. Supreme Court may extend required period 319
30. Certain later charges void 320
31. Effect of provisions on purchaser in good faith 320
page xxiii
[Draft Bill for public comment]
Co-operatives Bill 2006
Contents
Subdivision 5 -- Certain charges in favour of
persons void
32. Definitions 321
33. Charges in favour of certain persons void in certain
cases 322
34. Supreme Court may give leave for enforcement of
charge 322
35. Certain transactions excluded 323
Subdivision 6 -- Assignment, variation or
satisfaction of charges
36. Assignment and variation of charges 323
37. Satisfaction of, and release of property from,
charges 324
Subdivision 7 -- General
38. Lodgment of notices 325
39. Lodgment offences 325
40. Co-operative to keep documents relating to charges 326
41. Co-operative to keep register, and transitional
provision 326
42. Certificates 327
43. Power of Supreme Court to rectify register of
charges 328
44. Registrar may exempt from compliance with
certain requirements of Division 329
Division 3 -- Order of priority
Subdivision 1 -- General
45. Definitions 329
46. Priorities of charges 330
Subdivision 2 -- Priority rules
47. General priority rules in relation to registered
charges 331
48. General priority rule in relation to unregistered
charges 332
49. Special priority rules 332
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[Draft Bill for public comment]
Co-operatives Bill 2006
Contents
Schedule 4 -- Receivers, and other
controllers, of property of
co-operatives
1. Interpretation 335
2. Application of Schedule 336
3. Persons not to act as receivers 337
4. Supreme Court may declare whether controller is
validly acting 337
5. Liability of controller 338
6. Liability of controller under pre-existing
agreement about property used by co-operative 339
7. Powers of receiver 340
8. Controller's duty of care in exercising power of
sale 343
9. Supreme Court may authorise managing controller
to dispose of property despite prior charge 343
10. Receiver's power to carry on co-operative's
business during winding up 344
11. Controller's duties in relation to financial
institution accounts and financial records 345
12. Managing controller to report within 2 months
about co-operative's affairs 346
13. Reports by receiver 347
14. Supervision of controller 348
15. Controller may apply to Supreme Court 349
16. Power of Supreme Court to fix receiver's
remuneration 349
17. Controller has qualified privilege in certain cases 350
18. Notification of matters relating to controller 351
19. Statement that receiver appointed or other
controller acting 352
20. Officers to report to controller about co-operative's
affairs 352
21. Controller may require reports 354
22. Controller may inspect records 355
23. Lodging controller's accounts 356
24. Payment of certain debts, out of property subject to
floating charge, in priority to claims under charge 358
25. Enforcement of controller's duty to make returns 359
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Co-operatives Bill 2006
Contents
26. Supreme Court may remove controller for
misconduct 360
27. Supreme Court may remove redundant controller 360
28. Effect of clauses 26 and 27 361
Schedule 5 -- Applied co-operatives
provisions
1. Provisions applicable to participating co-operatives 362
2. Provisions applicable to non-participating
co-operatives 362
Schedule 6 -- Modifications to
Corporations Act
1. Modifications to winding up provisions 364
Schedule 7 -- Transitional and
savings provisions
Division 1 -- Preliminary
1. Terms used in this Schedule 366
2. Interpretation Act 1984 not affected 366
3. Transitional regulations 366
Division 2 -- Prohibition on registration under
former Act
4. Prohibition on registration under Companies
(Co-operative) Act 1943 or Co-operative and
Provident Societies Act 1903 367
Division 3 -- Transfer to incorporation under
this Act
5. Co-operative companies and registered societies to
register under this Act 368
6. Decision of Registrar to register co-operative
company or registered society 369
Division 4 -- General transitional provisions
7. Special resolutions, applications to the Court and
court orders 369
8. Inspections or inquiry 370
9. Acquisition of shares of shareholders dissenting
from scheme or contract approved by majority 370
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Co-operatives Bill 2006
Contents
10. Transitional provisions about active members 371
Division 5 -- Pending incorporation,
reconstruction or winding up
11. Pending incorporation 371
12. Pending reconstruction 372
13. Pending wind up 372
Schedule 8 -- Consequential
amendments and repeal
Division 1 -- Consequential amendments
commencing on registration of
Co-operative Bulk Handling Limited
1. Grain Marketing Act 2002 amended 374
2. Local Government Act 1995 amended 374
Division 2 -- Consequential amendments
commencing on commencement of this
Act
3. Civil Judgments Enforcement Act 2004 amended 375
4. Criminal Property Confiscation Act 2000 amended 375
5. Equal Opportunity Act 1984 amended 376
6. Taxi Act 1994 amended 376
7. Western Australian Treasury Corporation
Act 1986 amended 377
Division 3 -- Consequential amendments
commencing on repeal of former Acts
8. Civil Judgments Enforcement Act 2004 amended 377
9. Criminal Property Confiscation Act 2000 amended 377
10. Equal Opportunity Act 1984 amended 378
11. Housing Loan Guarantee Act 1957 amended 378
12. Local Government Act 1995 amended 378
13. Taxi Act 1994 amended 379
14. Western Australian Treasury Corporation
Act 1986 amended 379
Defined Terms
page xxvii
[Draft Bill for public comment]
Western Australia
LEGISLATIVE ASSEMBLY
Co-operatives Bill 2006
A draft for public comment of
A Bill for
An Act to provide a legislative framework for the formation,
registration and management of co-operatives and for related
purposes.
The Parliament of Western Australia enacts as follows:
page 1
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 1 Introductory
s. 1
Part 1 -- Preliminary
Division 1 -- Introductory
1. Short title
This is the Co-operatives Act 2006.
5 2. Commencement
(1) This Act, other than sections 495 and 496, and Schedule 8
Divisions 1 and 3, comes into operation on a day fixed by
proclamation.
(2) Sections 495 and 496, and Schedule 8 Division 3, come into
10 operation on the last day of the period of 2 years after the day
fixed under subsection (1).
(3) Schedule 8 Division 1 comes into operation on the day that
Co-operative Bulk Handling Limited becomes registered under
this Act.
15 3. Objects of this Act
The objects of this Act are to --
(a) enable the formation, registration and operation of
co-operatives; and
(b) promote co-operative philosophy, principles, practices
20 and objectives; and
(c) protect the interests of co-operatives, their members and
the public in the operations and activities of
co-operatives; and
(d) ensure that the directors of co-operatives are accountable
25 for their actions and decisions to the members of
co-operatives; and
(e) encourage and facilitate self-management by
co-operatives at all levels; and
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Co-operatives Bill 2006
Preliminary Part 1
Introductory Division 1
s. 4
(f) encourage the development, integration and
strengthening of co-operatives at local, regional,
national and international levels by supporting and
fostering State and national peak organisations and
5 co-operative instrumentalities.
4. Terms used in this Act
(1) In this Act --
"active member" has the meaning given to that term in
section 112;
10 "active membership provision" has the meaning given to that
term in section 113;
"agreement" means an agreement, arrangement or
understanding --
(a)whether formal or informal or partly formal and
15 partly informal; and
(b) whether written or oral or partly written and partly
oral; and
(c) whether or not having legal or equitable force and
whether or not based on legal or equitable rights;
20 "alter", in relation to the rules of a co-operative, includes to add
to, substitute or rescind;
"associate" has the meaning given to that term in Schedule 2
Division 2;
"board" means the board of directors of a co-operative and in
25 circumstances where a person or committee is exercising a
power of the board delegated under the rules of a
co-operative, includes that person or committee;
"co-operative" means a body registered under this Act as a
co-operative;
30 "co-operative capital unit" has the meaning given to that term
in section 262(1);
page 3
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 1 Introductory
s. 4
"co-operative group" means a co-operative that has a
membership as described in section 58;
"corporation" has the meaning given to that term in the
Corporations Act;
5 "Corporations Act" means the Commonwealth Corporations
Act 2001;
"debenture" means a document issued by a co-operative that
evidences or acknowledges indebtedness of the
co-operative in respect of money that is or may be
10 deposited with or lent to the co-operative, whether
constituting a charge on property of the co-operative or not,
and includes a unit of a debenture, except that it does not
include --
(a) a cheque, order for the payment of money or bill of
15 exchange; or
(b) a promissory note having a face value of not less than
$50 000; or
(c) any other document of a class that is prescribed by
the regulations as exempt from this definition;
20 "deed of arrangement" means a deed of company arrangement
in force under the Corporations Act Part 5.3A as that Part
applies under this Act or a deed of that type as varied and
in force from time to time;
"deposit taking co-operative" means a co-operative that is
25 permitted under section 251 to accept money on deposit;
"financial records" includes the following --
(a) invoices, receipts, orders for the payment of money,
bills of exchange, cheques, promissory notes and
vouchers;
30 (b) documents of prime entry;
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[Draft Bill for public comment]
Co-operatives Bill 2006
Preliminary Part 1
Introductory Division 1
s. 4
(c) working papers and other documents needed to
explain --
(i) the methods by which financial statements are
made up; and
5 (ii) adjustments to be made in preparing financial
statements;
"financial report" means an annual financial report or a
half-year financial report prepared under the Corporations
Act Chapter 2M;
10 "financial services business" has the meaning given to that
term in the Corporations Act section 761A;
"financial services licensee" has the meaning given to that
term in the Corporations Act section 761A;
"financial statements" means annual financial statements
15 under the Corporations Act section 295 or half-year
financial statements under applying under the Corporations
Act section 303;
"foreign co-operative" means a corporation that is registered,
incorporated or formed under, or subject to, a law in force
20 outside this State, including outside Australia, that
regulates co-operatives or organisations having attributes
the same as or similar to co-operatives except that it does
not include --
(a) a body incorporated under the Corporations Act or
25 under another law of the Commonwealth; or
(b) an authorised deposit-taking institution as defined in
the Commonwealth Banking Act 1959 section 5;
"inspector" means a person appointed as an inspector under
Part 15;
30 "model rules" means the model rules prescribed by the
regulations under section 102;
"mortgage" includes lien, charge or other security over
property;
page 5
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 1 Introductory
s. 4
"non-trading co-operative" means a co-operative as described
in section 14;
"officer", of a co-operative, means --
(a) a director, secretary or employee of the co-operative;
5 or
(b) a person who is concerned, or takes part, in the
management of the co-operative, whether or not as a
director; or
(c) a receiver and manager, appointed under a power
10 contained in an instrument, of property of the
co-operative; or
(d) an administrator of a deed of arrangement executed
by the co-operative; or
(e) a liquidator or provisional liquidator appointed in a
15 voluntary winding up of the co-operative; or
(f) an administrator of the co-operative appointed
under --
(i) the Corporations Act Part 5.3A as applying
under this Act; or
20 (ii) Part 12 Division 5 of this Act;
or
(g) a trustee or other person administering a compromise
or arrangement made between the co-operative and
another person;
25 "primary activity", of a co-operative, means an activity stated
in the rules of the co-operative to be a primary activity of
the co-operative;
"principal executive officer", of a co-operative or a subsidiary
of a co-operative, means the principal executive officer of
30 the co-operative or subsidiary for the time being, by
whatever name called, and whether or not that officer is a
director or the secretary;
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[Draft Bill for public comment]
Co-operatives Bill 2006
Preliminary Part 1
Introductory Division 1
s. 4
"records" includes books, financial records, financial
statements, minutes, registers, deeds, writings, documents
and other sources of information compiled, recorded or
stored in written form or on microfilm, or by electronic
5 process, or in any other manner or by any other means;
"Registrar" means the Registrar of Co-operatives under
section 456;
"related corporation" has the meaning given to that term in
Schedule 2 Division 3;
10 "relevant interest" in --
(a) a right to vote has the meaning given to that term in
Schedule 2 Division 1 clause 2(1); and
(b) a share has the meaning given to that term in
Schedule 2 Division 1 clause 2(2);
15 "rules", of a co-operative, means the rules of the co-operative
for the time being applying under this Act;
"seal", of a co-operative, means the common seal or official
seal of the co-operative;
"share" means share in the share capital of a co-operative;
20 "subsidiary" has the meaning given to that term in the
Corporations Act;
"surplus", in relation to a co-operative, means the excess of
income over expenditure after making proper allowance for
taxation expense, for depreciation in value of the property
25 of the co-operative and for future contingencies;
"trading co-operative" means a co-operative as described in
section 13;
"transfer day", for a particular transferred co-operative, means
the day on which that co-operative became registered under
30 this Act;
"transferred co-operative" means a co-operative that
immediately before the commencement of this Act was
registered as a co-operative company under the Companies
page 7
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 2 Qualified privilege
s. 5
(Co-operative) Act 1943 or as a registered society under the
Co-operative and Provident Societies Act 1903.
(2) A reference in this Act to the Corporations Act or a provision of
the Corporations Act applying under this Act (or a part of this
5 Act) is a reference to that Act or provision to the extent that it is
declared to apply to a matter for the purposes of the
Corporations (Ancillary Provisions) Act 2001 Part 3 as a law of
this State.
Division 2 -- Qualified privilege
10 5. Qualified privilege
(1) If this Act provides that a person has qualified privilege for an
act, matter or thing, the person, in relation to the act, matter or
thing --
(a) has qualified privilege in proceedings for defamation;
15 and
(b) is not, in the absence of malice on the person's part,
liable to an action for defamation at the suit of a person.
(2) In subsection (1) --
"malice" includes ill-will to the person concerned or any other
20 improper motive.
(3) Neither this section nor a provision of this Act that provides as
mentioned in subsection (1) limits or affects any right, privilege
or immunity that a person has, apart from this section or such a
provision, as a defendant in proceedings, or an action, for
25 defamation.
Division 3 -- The co-operative principles
6. Co-operative principles
The co-operative principles are the principles set out in the
following Table.
page 8
[Draft Bill for public comment]
Co-operatives Bill 2006
Preliminary Part 1
The co-operative principles Division 3
s. 6
Table of co-operative principles
Principle
1. Voluntary and open membership
A co-operative is a voluntary organisation, open to all
persons able to use its services and willing to accept the
responsibilities of membership, without gender, social,
racial, political or religious discrimination.
2. Democratic member control
A co-operative is a democratic organisation controlled by its
members, who actively participate in setting policies and
making decisions. Members serving as elected
representatives are accountable to the membership. In
co-operatives other than co-operative groups members have
equal voting rights (one member, one vote). Co-operative
groups are organised in a democratic manner.
3. Member economic participation
Members contribute equitably to, and democratically control,
the capital of their co-operative. Usually, at least part of that
capital is the common property of the co-operative. Usually,
members receive limited compensation, if any, for capital
subscribed as a condition of membership. Members of a
co-operative allocate surplus to be used for any or all of the
purposes of --
(a) developing the co-operative, possibly by setting up
reserves, at least part of which are indivisible; and
(b) benefiting members in proportion to their
transactions with the co-operative; and
(c) supporting other activities approved by the
membership.
4. Autonomy and independence
A co-operative is an autonomous, self-help organisation
controlled by its members. If a co-operative enters into
agreements with other organisations, including governments,
or raises capital from external sources, it does so on terms
that ensure democratic control by its members and maintain
its autonomy.
page 9
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 4 Application of Corporations Act to co-operatives
s. 7
Principle
5. Education, training and information
A co-operative provides education and training for its
members, elected representatives, managers and employees
so they can contribute effectively to the development of the
co-operative. A co-operative informs the general public,
particularly young people and opinion leaders, about the
nature and benefits of co-operatives.
6. Co-operation among co-operatives
Co-operatives serve their members most effectively and
strengthen the co-operative movement by working together
through local, national, regional and international structures.
7. Concern for the community
Co-operatives, while focusing on member needs, work for
the sustainable development of their communities through
policies accepted by their members.
7. Interpretation to promote co-operative principles
In the interpretation of a provision of this Act, a construction
that would promote co-operative principles is to be preferred to
a construction that would not promote co-operative principles.
5 Division 4 -- Application of Corporations Act to co-operatives
8. Definitions
In this Division --
"company" has the meaning given to that term in the
Corporations Act section 9;
10 "Corporations legislation" means the Corporations legislation
to which the Corporations Act Part 1.1A applies;
"excluded Corporations legislation provision" means any
provision of the Corporations legislation that does not
apply to co-operatives as a law of the Commonwealth.
page 10
[Draft Bill for public comment]
Co-operatives Bill 2006
Preliminary Part 1
Application of Corporations Act to co-operatives Division 4
s. 9
9. Excluded matter
(1) A co-operative is declared to be an excluded matter for the
purposes of the Corporations Act section 5F in relation to the
whole of the Corporations legislation other than to the extent
5 specified in subsection (2).
(2) Subsection (1) does not exclude the application of the following
provisions of the Corporations legislation to co-operatives to the
extent that the provisions would otherwise be applicable to
them --
10 (a) provisions relating to a matter that the regulations
provide is not to be excluded from the operation of the
Corporations legislation;
(b) provisions relating to the role of a co-operative in the
formation of a company;
15 (c) provisions relating to the registration of a co-operative
as a company under the Corporations Act Chapter 5B;
(d) provisions relating to substantial shareholdings, by or
involving a co-operative, in a company;
(e) provisions conferring or imposing functions on a
20 co-operative as a member, or former member, of a
corporation;
(f) provisions relating to dealings by a co-operative in
financial products of a corporation, other than financial
products of the co-operative itself;
25 (g) provisions conferring or imposing functions on a
co-operative in its dealings with a corporation, not being
dealings in financial products of the co-operative;
(h) provisions relating to financial products of a
co-operative, other than shares in, co-operative capital
30 units in, debentures of or deposits with a co-operative;
(i) provisions relating to financial markets and participants
in financial markets;
page 11
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Co-operatives Bill 2006
Part 1 Preliminary
Division 4 Application of Corporations Act to co-operatives
s. 9
(j) provisions relating to financial services licensees whose
licence covers dealing in, or providing advice about,
financial products;
(k) provisions relating to carrying on a financial services
5 business;
(l) provisions relating to financial statements, and audits of
financial statements, of financial services licensees
whose licence covers dealing in, or providing advice
about, financial products;
10 (m) provisions relating to clients of financial services
licensees whose licence covers dealing in, or providing
advice about, financial products;
(n) provisions relating to registers of interests in financial
products.
15 (3) To remove doubt it is declared that subsection (1) does not
operate to exclude the operation of the following provisions of
the Corporations Act, except in relation to shares in,
co-operative capital units in, debentures of, or deposits with, a
co-operative --
20 (a) Part 1.2A;
(b) Chapter 2L;
(c) Chapter 6CA;
(d) Chapter 6D;
(e) Part 7.10.
25 (4) If a co-operative is directed by an order of the Supreme Court
under section 85(i) to become registered as a company under the
Corporations Act, the provisions referred to in subsection (2)(c)
apply to the extent necessary for the co-operative to be
registered as a company under Chapter 5B of that Act.
page 12
[Draft Bill for public comment]
Co-operatives Bill 2006
Preliminary Part 1
Application of Corporations Act to co-operatives Division 4
s. 10
10. Applying the Corporations legislation to co-operatives
(1) The regulations may declare a matter relating to co-operatives to
be an applied Corporations legislation matter for the purposes of
the Corporations (Ancillary Provisions) Act 2001 Part 3 in
5 relation to any excluded Corporations legislation provision or
provisions, with any modifications that are specified in the
declaration.
(2) Without limiting subsection (1), any such regulations may --
(a) specify modifications to the definitions and other
10 interpretative provisions of the Corporations legislation
relevant to any excluded Corporations legislation
provision that is the subject of the declaration; and
(b) provide for ASIC to exercise a function under any
excluded Corporations legislation provision that is the
15 subject of the declaration, but only if --
(i) ASIC is to exercise the function under an
agreement referred to in section 11(8) or (9A)(b)
of the ASIC Act; and
(ii) ASIC is authorised to exercise that function
20 under section 11 of the ASIC Act;
and
(c) specify that a reference to ASIC in an excluded
Corporations legislation provision that is the subject of
the declaration is to be a reference to another person;
25 and
(d) identify an excluded Corporations legislation provision
to which the declaration relates by reference to the
provision as in force at a particular time; and
(e) specify a court (other than the Supreme Court) to
30 exercise a function conferred on a court or the Court by
an excluded Corporations legislation provision to which
the declaration relates.
page 13
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 1 Preliminary
Division 4 Application of Corporations Act to co-operatives
s. 11
(3) Words and expressions used in this section and also in the
Corporations (Ancillary Provisions) Act 2001 Part 3 have the
same meanings in this section as they have in that Part.
11. Modifications to applied provisions
5 (1) If a provision of this Act or the regulations declares a matter to
be an applied Corporations legislation matter for the purposes of
the Corporations (Ancillary Provisions) Act 2001 Part 3 (the
"declaratory provision") in relation to any provisions of the
Corporations legislation (the "applied provisions"), the
10 declaratory provision is taken to specify the following
modifications --
(a) a reference in the applied provisions to articles or a
memorandum of association or a constitution or
replaceable rules is to be read as a reference to rules;
15 (b) a cross-reference in the applied provisions to another
provision of the Corporations Act is, if that
cross-reference is not appropriate (because for example
the provision cross-referred to is not among the applied
provisions), to be read as a cross-reference to the
20 equivalent provision of this Act;
(c) a reference in the applied provisions to the Gazette is to
be read as a reference to the Western Australian
Government Gazette;
(d) a reference in the applied provisions to the
25 Commonwealth is to be read as a reference to this State;
(e) any of the applied provisions that are not relevant to
co-operatives or that are incapable of application to
co-operatives are to be ignored;
(f) modifications prescribed under a regulation under
30 subsection (2).
(2) The regulations may prescribe the modifications that are
necessary or desirable for the effective operation of the applied
provisions.
page 14
[Draft Bill for public comment]
Co-operatives Bill 2006
Formation Part 2
Types of co-operatives Division 1
s. 12
Part 2 -- Formation
Division 1 -- Types of co-operatives
12. Types of co-operatives
(1) A body may be registered under this Act as a co-operative.
5 (2) A co-operative may be either --
(a) a trading co-operative; or
(b) a non-trading co-operative.
13. Trading co-operatives
(1) A trading co-operative must have a share capital.
10 (2) A trading co-operative is a co-operative whose rules allow it to
give returns or distributions on surplus or share capital.
(3) A trading co-operative must have a membership of --
(a) for a co-operative group, 2 or more co-operatives; and
(b) for any other trading co-operative --
15 (i) if a lesser number than 5 is prescribed by the
regulations, at least that number of active
members; or
(ii) otherwise, 5 or more active members.
14. Non-trading co-operatives
20 (1) A non-trading co-operative is a co-operative whose rules
prohibit it from giving returns or distributions on surplus or
share capital to members, other than the nominal value of
shares, if any, at winding up.
(2) A non-trading co-operative may or may not have a share capital.
25 (3) A non-trading co-operative must have a membership of --
(a) for a co-operative group, 2 or more co-operatives; and
page 15
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 2 Formation
Division 2 Formation meeting
s. 15
(b) for any other non-trading co-operative --
(i) if a lesser number than 5 is prescribed by the
regulations, at least that number of active
members; or
5 (ii) otherwise, 5 or more active members.
Division 2 -- Formation meeting
15. Formation meeting
(1) Before a proposed co-operative, other than an existing
corporation, can be registered, a formation meeting must be held
10 in accordance with this section.
(2) At the formation meeting --
(a) a person must act as chairman, and a person must be
specified to act as secretary; and
(b) in the case of a proposed trading co-operative, a
15 disclosure statement approved under section 16 must be
presented to the meeting; and
(c) the proposed rules of the co-operative approved under
section 17 in respect of the proposed co-operative, must
be agreed to by two-thirds of the prospective members
20 attending the meeting; and
(d) the prospective members attending the meeting must
sign the application for membership; and
(e) the prospective members attending the meeting must
elect the first directors of the proposed co-operative in
25 accordance with the proposed rules; and
(f) the prospective members attending the meeting must
authorise a person --
(i) to apply to the Registrar for registration of the
proposed co-operative; and
30 (ii) to do anything necessary to have the proposed
co-operative registered.
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Formation Part 2
Approval of disclosure statement and rules Division 3
s. 16
(3) The formation meeting must be held by --
(a) for a co-operative group, not less than 2 suitably
qualified co-operatives; and
(b) for any other co-operative, not less than 5 persons, or if
5 a lesser number than 5 is prescribed by the regulations,
not less than the prescribed number of persons, suitably
qualified to be members of the proposed co-operative.
(4) For the purposes of subsection (3), a person or a co-operative is
suitably qualified to be a member if --
10 (a) there are reasonable grounds to believe the person or
co-operative will be an active member of the proposed
co-operative; and
(b) for an individual, the person has attained the age of 18;
and
15 (c) the person satisfies any other requirements for
membership set out in the proposed rules.
(5) Each co-operative forming a proposed co-operative group may
be represented at the formation meeting by one person.
Division 3 -- Approval of disclosure statement and rules
20 16. Approval of disclosure statement
(1) A draft disclosure statement of a proposed trading co-operative
must be submitted to the Registrar at least 28 days (or a shorter
period the Registrar may allow in a particular case) before the
formation meeting is due to be held.
25 (2) The draft disclosure statement submitted under subsection (1)
must be accompanied by a written statement specifying the date
on which the formation meeting is due to be held.
(3) The disclosure statement must contain the information
necessary to ensure that prospective members are adequately
30 informed of the nature and extent of a person's financial
page 17
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 2 Formation
Division 3 Approval of disclosure statement and rules
s. 16
involvement or liability as a member of the co-operative
including so far as applicable --
(a) the estimated costs of formation; and
(b) the active membership provisions of the proposed
5 co-operative; and
(c) the rights and liabilities attaching to shares in the
proposed co-operative; and
(d) the capital required for the co-operative at the time of
formation; and
10 (e) the projected income and expenditure of the
co-operative for its first year of operation; and
(f) information about any contracts required to be entered
into by the co-operative; and
(g) any other information that the Registrar directs.
15 (4) The disclosure statement must not include a statement
purporting to be made by an expert or to be based on a
statement made by an expert unless --
(a) the expert has given, and has not withdrawn, the
expert's written consent to the submission of the
20 disclosure statement with the statement included in the
form and context in which it is included; and
(b) there appears in the disclosure statement a statement that
the expert has given, and has not withdrawn, the
expert's consent.
25 (5) The Registrar may --
(a) approve the draft statement as submitted; or
(b) amend the draft statement, or require a stated
amendment of the draft, and then approve the amended
statement; or
30 (c) approve a different statement to that submitted; or
(d) refuse to approve the statement; or
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Co-operatives Bill 2006
Formation Part 2
Approval of disclosure statement and rules Division 3
s. 17
(e) require the person submitting the disclosure statement to
give the Registrar any additional information the
Registrar reasonably requires, and then act under
paragraph (a), (b), (c) or (d).
5 (6) The Registrar may approve a disclosure statement with or
without conditions.
(7) Subject to subsection (8), the Registrar approves of a disclosure
statement by giving written notice of the approval of the
statement to the person who submitted the draft statement to the
10 Registrar.
(8) The Registrar is taken to have approved the disclosure statement
as submitted to the Registrar unless at least 5 days before the
date specified in the written statement submitted under
subsection (2), the Registrar gives written notice to the person
15 who submitted the draft statement that the Registrar --
(a) has approved an amended or different disclosure
statement; or
(b) is still considering the matter; or
(c) refuses to approve the disclosure statement.
20 17. Approval of rules
(1) A draft of the rules proposed for the co-operative (including
active membership provisions in accordance with Part 6) must
be submitted to the Registrar at least 35 days (or a shorter
period the Registrar may allow in a particular case) before the
25 formation meeting is due to be held.
(2) The draft rules submitted under subsection (1) must be
accompanied by a written statement specifying the date on
which the formation meeting is due to be held.
(3) The proposed rules must --
30 (a) be in accordance with section 99; and
(b) be in a form that may reasonably be approved; and
page 19
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 2 Formation
Division 4 Registration of proposed co-operative
s. 18
(c) if the rules contain any alterations of the model rules, be
accompanied by a statement setting out the alterations
and the reasons for the alterations.
(4) If the proposed rules do not make provision for each matter
5 included in the model rules, the Registrar may approve the
relevant provisions of the model rules as rules of the
co-operative.
(5) The Registrar may --
(a) approve the proposed rules as submitted; or
10 (b) approve different proposed rules to those submitted; or
(c) refuse to approve the proposed rules.
(6) Subject to subsection (7), the Registrar approves proposed rules
by giving written notice of that approval to the person who
submitted the proposed rules to the Registrar.
15 (7) The Registrar is taken to have approved the proposed rules as
submitted to the Registrar unless at least 5 days before the date
specified in the written statement submitted under
subsection (2), the Registrar gives written notice to the person
who submitted the proposed rules that the Registrar --
20 (a) has approved different proposed rules to those
submitted; or
(b) is still considering the matter; or
(c) refuses to approve the proposed rules.
Division 4 -- Registration of proposed co-operative
25 18. Application for registration of proposed co-operative
(1) An application for registration as a co-operative, other than an
application by a corporation under Division 5, must --
(a) be made in the form approved by the Registrar; and
(b) be accompanied by the fee prescribed by the regulations;
30 and
page 20
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Co-operatives Bill 2006
Formation Part 2
Registration of proposed co-operative Division 4
s. 18
(c) be signed by --
(i) for a co-operative group, at least 2 directors
elected at the formation meeting; and
(ii) for any other proposed co-operative, at least 5, or
5 if a lesser number than 5 is prescribed under a
regulation, at least the prescribed number of,
suitably qualified members, including 2 directors
elected at the formation meeting;
and
10 (d) be accompanied by --
(i) a copy of the proposed rules, certified in writing
by the chairman and secretary for the formation
meeting to have been agreed to at the formation
meeting in accordance with section 15(2)(c); and
15 (ii) in the case of a proposed trading co-operative, a
copy of the disclosure statement, certified in
writing by the chairman and secretary for the
formation meeting to have been presented to that
meeting as required by section 15(2)(b); and
20 (iii) a statement listing the name, address, occupation
and place and date of birth of each person elected
at the formation meeting in accordance with
section 15(2)(e) to be a director of the proposed
co-operative and containing a certificate signed
25 by the chairman and secretary verifying that
those persons were elected; and
(iv) a certificate signed by the chairman and secretary
verifying that a specified person is the person
authorised under section 15(2)(f); and
30 (v) any other particulars that the Registrar may
require.
(2) The application must be lodged with the Registrar within
2 months after closure of the formation meeting for the
page 21
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Co-operatives Bill 2006
Part 2 Formation
Division 4 Registration of proposed co-operative
s. 19
proposed co-operative or within the extended period that the
Registrar may allow.
19. Registration of co-operative
(1) When an application is made under this Division for registration
5 of a proposed co-operative, the Registrar must register the
co-operative and its rules if satisfied that the requirements
referred to in subsection (2) have been met.
(2) The requirements for registration of a co-operative under this
Division are that --
10 (a) the proposed rules of the proposed co-operative must be
those approved by the Registrar under section 17; and
(b) the requirements of this Act must have been complied
with in relation to the proposed co-operative and
compliance must be likely to continue; and
15 (c) the proposed co-operative must be designed to function
in accordance with the co-operative principles or, if it is
not designed to function entirely in accordance with the
co-operative principles, the Registrar must be satisfied
that there are special reasons why the co-operative
20 should be registered under this Act; and
(d) there must be no reasonable cause for refusing
registration of the proposed co-operative.
(3) If the Registrar is not satisfied that the requirements for
registration of the co-operative have been met the Registrar may
25 refuse to register the co-operative and its rules.
(4) The Registrar must give to the applicant written notice of the
refusal and the reasons for the refusal.
20. Incorporation and certificate of registration
(1) The incorporation of the co-operative takes effect on the
30 registration of the co-operative.
page 22
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Co-operatives Bill 2006
Formation Part 2
Registration of an existing corporation Division 5
s. 21
(2) On the registration of the co-operative, the Registrar must issue
a certificate of registration.
Division 5 -- Registration of an existing corporation
21. Existing corporation can be registered
5 A corporation may apply to the Registrar to be registered as a
co-operative under this Act, if the corporation is --
(a) incorporated or registered or deemed to be registered
under the Corporations Act; or
(b) incorporated or registered under any other Act relating
10 to the incorporation or registration of bodies corporate.
22. Formation meeting and transitional provision
(1) Before applying for registration as a co-operative, a corporation
must pass a special resolution in accordance with its articles of
association or rules approving of --
15 (a) the proposed registration; and
(b) any alterations of its existing memorandum and articles
of association or rules necessary to enable the
corporation to comply with this Act.
(2) At the meeting to pass the special resolution --
20 (a) the proposed rules of the proposed co-operative
approved under section 17, and including active
membership provisions in accordance with Part 6, must
also be passed by special resolution; and
(b) in the case of a proposed trading co-operative, a
25 disclosure statement approved under section 16 must be
presented to the meeting.
(3) For a corporation that on registration under this Division will be
a transferred co-operative, the requirement to pass a special
resolution approving the proposed registration and the proposed
page 23
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 2 Formation
Division 5 Registration of an existing corporation
s. 23
rules is satisfied if the resolution complies with
section 182(1)(a) and (3).
23. Application for registration
An application for registration must be --
5 (a) in the form approved by the Registrar; and
(b) accompanied by the fee prescribed by the regulations;
and
(c) accompanied by --
(i) a written declaration signed by the directors or
10 the committee of management of the corporation
stating that at a meeting of the directors or
committee they formed the opinion that the
corporation will be able to pay its debts as they
fall due; and
15 (ii) a report in the form approved by the Registrar as
to the affairs of the corporation and showing its
assets and liabilities, made up to the latest
practicable date before the application; and
(iii) a copy of the memorandum and articles of
20 association or rules of the corporation in force at
the date of the application; and
(iv) 2 copies of the proposed rules of the
co-operative, certified in writing by the directors
or the committee of management to have been
25 approved under section 22(2) by special
resolution; and
(v) in the case of a proposed trading co-operative, a
copy of the disclosure statement presented to the
meeting held under section 22, certified in
30 writing by the directors or committee of
management of the corporation to have been
presented to that meeting; and
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Co-operatives Bill 2006
Formation Part 2
Registration of an existing corporation Division 5
s. 24
(vi) a list containing the name, address, occupation
and place and date of birth of each director; and
(vii) evidence to the satisfaction of the Registrar of
the incorporation of the existing corporation; and
5 (viii) any other particulars that the Registrar may
require.
24. Requirements for registration
(1) When an application is made for registration as a co-operative
under this Division, the Registrar must register the corporation
10 as a co-operative under this Act and register its rules under this
Act if the Registrar is satisfied that the requirements for
registration of the co-operative have been met.
(2) The requirements for registration as a co-operative under this
Division are as follows --
15 (a) the proposed rules of the proposed co-operative must be
the proposed rules approved by the Registrar under
section 17;
(b) the requirements of this Act must have been complied
with in relation to the proposed co-operative and
20 compliance must be likely to continue;
(c) there must be no reasonable cause for refusing
registration of the proposed co-operative.
(3) If the Registrar is not satisfied that the requirements for
registration of the co-operative have been met, the Registrar
25 may refuse to register the co-operative and its rules and must
give to the applicant written notice of the refusal and the reasons
for the refusal.
(4) If the Registrar has decided under this section to register a
corporation under this Act, the corporation must notify the
30 authority responsible for registering the corporation under the
law under which it was previously registered of that decision.
page 25
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Co-operatives Bill 2006
Part 2 Formation
Division 5 Registration of an existing corporation
s. 25
(5) Despite anything to the contrary in this Division, the registration
of a corporation as a co-operative does not take effect until the
corporation ceases to be registered under the law under which it
was previously registered.
5 (6) The corporation must notify the Registrar in writing within
7 days after ceasing to be registered under that other law.
25. Transitional provision
(1) This section applies to a corporation that, on registration under
this Division, will be a transferred co-operative.
10 (2) Section 24(4) to (6) does not apply to the corporation.
(3) If the Registrar decides to register the corporation, the Registrar
must ensure that the corporation ceases to be registered under
the old Act.
26. Certificate of registration
15 (1) On the registration of a corporation as a co-operative, the
Registrar must --
(a) issue a certificate of registration to the corporation; and
(b) publish notice of the issue of the certificate in the
Gazette.
20 (2) The corporate name of a corporation registered as a co-operative
is the name approved by the Registrar, as specified in the
certificate of registration issued by the Registrar.
27. Effect of registration
(1) The corporation is taken to be incorporated under this Act on its
25 registration.
(2) Except as expressly provided in this Act, the registration and
incorporation of the corporation as a co-operative does not
prejudice any right of a member in respect of any shares held at
the time of registration and incorporation.
page 26
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Co-operatives Bill 2006
Formation Part 2
Conversion of co-operative Division 6
s. 28
(3) The change of registration and incorporation does not affect the
identity of the corporation which is taken to be the same body
after registration as a co-operative as it was before and no act,
matter or thing is affected by the change.
5 Division 6 -- Conversion of co-operative
28. Conversion of co-operative
(1) A co-operative may, by alteration of its rules, convert from --
(a) a co-operative with share capital to a co-operative
without share capital or vice versa; or
10 (b) a trading co-operative to a non-trading co-operative or
vice versa.
(2) An alteration of the rules for the conversion of a co-operative
must be approved by special resolution passed by means of a
special postal ballot.
15 Division 7 -- Reviews
29. Appeal against refusal to approve disclosure statement
The person who submitted a draft disclosure statement to the
Registrar under this Act may appeal to the Supreme Court
against a failure of the Registrar to approve the statement.
20 30. Appeal against refusal to approve draft rules
The person who submitted draft rules to the Registrar under this
Act may appeal to the Supreme Court against a failure of the
Registrar to approve the rules.
31. Appeal against refusal to register
25 The applicant for registration of a proposed co-operative under
this Part may appeal to the Supreme Court against a failure of
the Registrar to register the co-operative.
page 27
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Co-operatives Bill 2006
Part 2 Formation
Division 8 General
s. 32
32. Supreme Court's powers on appeal
The Supreme Court may make any order it considers
appropriate to dispose of an appeal under this Division.
Division 8 -- General
5 33. Acceptance of money by proposed co-operative
(1) A proposed co-operative that, or a person on a proposed
co-operative's behalf who, accepts money for the proposed
co-operative before the proposed co-operative is registered must
hold that money on trust until the co-operative is registered.
10 (2) If a co-operative is not registered within the period of 3 months
after the acceptance of money under subsection (1), the
proposed co-operative or the person who accepted the money on
its behalf must refund the money to the person who paid it.
Penalty: a fine of $6 000.
15 34. Issue of duplicate certificate
The Registrar must issue a duplicate certificate of registration
if --
(a) the Registrar is satisfied that the original certificate is
lost or destroyed; and
20 (b) the fee prescribed by the regulations is paid.
page 28
[Draft Bill for public comment]
Co-operatives Bill 2006
Legal capacity and powers Part 3
General powers Division 1
s. 35
Part 3 -- Legal capacity and powers
Division 1 -- General powers
35. Effect of incorporation
As a corporation, a co-operative --
5 (a) has perpetual succession; and
(b) has a common seal; and
(c) may sue and be sued in its corporate name; and
(d) subject to this Act, is capable of taking, purchasing,
leasing, holding, selling and disposing of real and
10 personal property; and
(e) may do and suffer all acts and things that corporations
may by law do and suffer and that are necessary or
expedient.
36. Power to form companies and enter into joint ventures
15 Without limiting any other provision of this Act, a co-operative
has power --
(a) to form or participate in the formation of a corporation
or unit trust; and
(b) to acquire interests in and sell or otherwise dispose of
20 interests in corporations, unit trusts and joint ventures;
and
(c) to form or enter into a partnership, joint venture or other
association with other persons or bodies.
Division 2 -- Doctrine of ultra vires abolished
25 37. Interpretation
In this Division --
(a) a reference to the doing of an act by a co-operative
includes a reference to the making of an agreement by
page 29
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Co-operatives Bill 2006
Part 3 Legal capacity and powers
Division 2 Doctrine of ultra vires abolished
s. 38
the co-operative and a reference to a transfer of property
to or by the co-operative; and
(b) a reference to legal capacity includes a reference to
powers.
5 38. Doctrine of ultra vires abolished
(1) The objects of this Division are --
(a) to provide that the doctrine of ultra vires does not apply
to co-operatives; and
(b) without affecting the validity of a co-operative's
10 dealings with others, to ensure that the co-operative's
officers and members give effect to the provisions of the
co-operative's rules relating to the primary activities or
powers of the co-operative.
(2) This Division is to be construed and have effect in accordance
15 with subsection (1).
39. Legal capacity
(1) A co-operative has, both within and outside this State, the legal
capacity of a natural person.
(2) Without limiting subsection (1), a co-operative has, both within
20 and outside this State, power --
(a) to issue and allot fully or partly paid shares in the
co-operative; and
(b) to issue debentures of, and co-operative capital units in,
the co-operative; and
25 (c) to distribute any of the property of the co-operative
among the members, in kind or otherwise; and
(d) to give security by charging uncalled capital; and
(e) to grant a charge on property of the co-operative; and
page 30
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Co-operatives Bill 2006
Legal capacity and powers Part 3
Doctrine of ultra vires abolished Division 2
s. 40
(f) to procure the co-operative to be registered or
recognised as a corporation in any place outside this
State; and
(g) to do any other act that it is authorised to do by any
5 other law, including a law of a place outside this State.
(3) Subsections (1) and (2) have effect in relation to a
co-operative --
(a) subject to this Act but despite section 40(2); and
(b) if the co-operative's rules contain an express or implied
10 restriction on, or an express or implied prohibition of,
the exercise by the co-operative of any of its powers,
despite that restriction or prohibition; and
(c) if the rules of the co-operative contain a provision
stating the objects of the co-operative, despite that fact.
15 (4) The fact that the doing of an act by a co-operative would not be,
or is not, in its best interests does not affect its legal capacity to
do the act.
40. Restrictions on co-operatives in rules
(1) A co-operative's rules may contain an express restriction on, or
20 an express prohibition of, the exercise by the co-operative of a
power of the co-operative.
(2) A co-operative contravenes this section if --
(a) it exercises a power contrary to an express restriction on,
or an express prohibition of, the exercise of that power,
25 being a restriction or prohibition contained in the
co-operative's rules; or
(b) the rules of the co-operative contain a provision stating
the objects of the co-operative and the co-operative does
an act otherwise than in pursuance of those objects.
30 (3) An officer of a co-operative who is involved in a contravention
by the co-operative of this section also contravenes this section.
page 31
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Part 3 Legal capacity and powers
Division 2 Doctrine of ultra vires abolished
s. 41
(4) A person who contravenes this section is not guilty of an
offence.
41. Results of contravention of restriction in rules
(1) The exercise of a power or the doing of an act in contravention
5 of section 40 is not invalid merely because of the contravention.
(2) An act of an officer of a co-operative is not invalid merely
because, by doing the act, the officer contravenes section 40.
(3) The fact that the exercise of a power or the doing of an act
contravenes or would contravene section 40 may be asserted or
10 relied on only in --
(a) a prosecution of a person for an offence against this Act;
or
(b) an application for an order under Part 4 Division 5; or
(c) an application for an injunction under section 485 to
15 restrain the co-operative from entering into an
agreement; or
(d) proceedings, other than an application for an injunction,
by the co-operative, or by a member of the co-operative,
against the present or former officers of the
20 co-operative; or
(e) an application by the Registrar or by a member of the
co-operative for the winding up of the co-operative.
(4) If, but for subsection (3), a court would have power under
section 485 to grant, on the application of a person, an
25 injunction restraining a co-operative or an officer of a
co-operative from engaging in particular conduct constituting a
contravention of section 40, the court may, on the application of
that person, order the co-operative or the officer to pay damages
to that person or any other person.
page 32
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Co-operatives Bill 2006
Legal capacity and powers Part 3
Persons having dealings with co-operatives Division 3
s. 42
Division 3 -- Persons having dealings with co-operatives
42. Assumptions entitled to be made
(1) A person is entitled to make the assumptions in section 43 in
relation to --
5 (a) dealings with a co-operative; and
(b) dealings with a person who has, or purports to have,
directly or indirectly acquired title to property from a
co-operative.
(2) If a person is entitled to assume a matter, the co-operative or
10 anyone referred to in subsection (1)(b) is not entitled to assert in
proceedings in relation to the dealings that the matter is
incorrect.
43. Assumptions
(1) A person may assume that the co-operative's rules have been
15 complied with.
(2) A person may assume that anyone who appears, from
information provided by the co-operative that is available to the
public from the Registrar, to be a director or officer of the
co-operative --
20 (a) has been properly appointed; and
(b) has authority to exercise the powers and perform the
duties customarily exercised or performed by a director
or officer of a similar co-operative.
(3) A person may assume that anyone who is held out by the
25 co-operative to be an officer or agent of the co-operative --
(a) has been properly appointed; and
(b) has authority to exercise the powers and to perform the
duties customarily exercised or performed by that kind
of officer or agent of a similar co-operative.
page 33
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Part 3 Legal capacity and powers
Division 3 Persons having dealings with co-operatives
s. 44
(4) A person may assume that anyone who is, or may be assumed to
be, an officer or agent of the co-operative who has authority to
issue a document or a certified copy of a document on its behalf
also has authority to warrant that the document is genuine or is a
5 true copy.
(5) A person may assume that a document has been properly
executed by the co-operative if it is signed by 2 people, one of
whom is, or may be assumed to be, a director of the
co-operative, and the other is, or may be assumed to be, a
10 director or officer of the co-operative.
(6) A person may assume that a document has been sealed by the
co-operative if it bears what appears to be an impression of the
co-operative's seal and the sealing of the document appears to
be witnessed by 2 people, one of whom is, or may be assumed
15 to be, a director of the co-operative, and the other is, or may be
assumed to be, a director or officer of the co-operative.
(7) A person may assume that the officers and agents of the
co-operative properly perform their duties to the co-operative.
44. Person who knows or ought to know is not entitled to make
20 assumptions
This Division does not entitle a person to make an assumption,
and does not prevent an assertion being made in relation to an
assumption if --
(a) the person has actual knowledge that the assumption is
25 not correct; or
(b) the person's connection or relationship with the
co-operative is such that the person ought to know that
the assumption is not correct.
page 34
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Co-operatives Bill 2006
Legal capacity and powers Part 3
Persons having dealings with co-operatives Division 3
s. 45
45. Lodgment of documents not to constitute constructive
knowledge
(1) A person is not considered to have knowledge of a
co-operative's rules, any of the contents of a co-operative's
5 rules, a document, the contents of a document, or any
particulars, merely because of either or both of the following --
(a) the rules, the document or the particulars have been
lodged with the Registrar;
(b) the rules, the document or the particulars are referred to
10 in any other document that has been lodged with the
Registrar, or lodged with a person under a previous law
corresponding to a provision of this Act.
(2) Subsection (1) does not apply in relation to a document, or in
relation to the contents of a document, that has been lodged
15 under Part 10 Division 3 to the extent that the document relates
to a charge that is registrable under that Division or law.
(3) Despite subsection (1), a member of a co-operative is taken to
have knowledge of the rules of the co-operative.
46. Effect of fraud
20 (1) A person's entitlement under this Division to make an
assumption is not affected merely by the fact that a person --
(a) has acted or is acting fraudulently in relation to the
dealing or acquisition or purported acquisition of title to
property to which the assumption relates; or
25 (b) has forged a document that appears to have been sealed
on behalf of a co-operative.
(2) A person is not entitled to make an assumption if the person has
actual knowledge of the fraudulent action or forgery referred to
in subsection (1).
page 35
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 3 Legal capacity and powers
Division 4 Authentication and execution of documents and confirmation
of contracts
s. 47
Division 4 -- Authentication and execution of documents and
confirmation of contracts
47. Common seal
A document or proceeding requiring authentication by a
5 co-operative may be authenticated under the common seal of the
co-operative.
48. Official seal
(1) A co-operative may, if authorised by its rules, have, for use in
place of its common seal outside the State where its common
10 seal is kept, one or more official seals, each of which must be a
facsimile of the common seal of the co-operative with the
addition on its face of the name of every place where it is to be
used.
(2) The person affixing an official seal must, in writing signed by
15 the person, certify on the document to which it is affixed the
date on which and the place at which it is affixed.
(3) A document sealed with an official seal is taken to be sealed
with the common seal of the co-operative.
49. Authentication need not be under seal
20 A document or proceeding requiring authentication by a
co-operative may be authenticated by the signature of two
people, one of whom is a director of the co-operative and one of
whom is a director or the secretary of the co-operative and need
not be authenticated under the seal of the co-operative.
25 50. Co-operative may authorise person to execute deed
(1) A co-operative may, by writing under its common seal,
empower a person, either generally or in relation to a specified
matter, as its agent or attorney ("authorised attorney") to
execute deeds on its behalf.
page 36
[Draft Bill for public comment]
Co-operatives Bill 2006
Legal capacity and powers Part 3
Authentication and execution of documents and confirmation Division 4
of contracts
s. 51
(2) A deed signed by an authorised attorney on behalf of the
co-operative and under the seal of the attorney, or under the
appropriate official seal of the co-operative, binds the
co-operative and has effect as if it were under the common seal
5 of the co-operative.
(3) The authority of an authorised attorney, as between the
co-operative and a person dealing with the attorney, continues
during the period, if any, specified in the instrument conferring
the authority or, if no period is specified, until notice of the
10 revocation or termination of the authority of the attorney has
been given to the person dealing with the attorney.
51. Execution under seal
A contract or other document executed, or purporting to have
been executed, under the seal of a co-operative is not invalid
15 merely because a person attesting the affixing of the seal was in
any way, whether directly or indirectly, interested in the
contract or other document or in the matter to which the contract
or other document relates.
52. Contractual formalities
20 (1) So far as concerns the formalities of making, varying or
discharging a contract, a person acting under the express or
implied authority of a co-operative may make, vary or discharge
a contract in the name of, or on behalf of, the co-operative as if
that contract were made, varied or discharged by a natural
25 person.
(2) The making, varying or discharging of a contract under
subsection (1) is effectual in law and binds the co-operative and
other parties to the contract.
(3) This section does not prevent a co-operative from making,
30 varying or discharging a contract under its seal.
page 37
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 3 Legal capacity and powers
Division 5 Pre-registration contracts
s. 53
53. Other requirements as to consent or sanction not affected
This Division does not affect the operation of a law that requires
some consent or sanction to be obtained, or some procedure to
be complied with, in relation to the making, varying or
5 discharging of a contract.
Division 5 -- Pre-registration contracts
54. Contracts before registration
(1) If a person enters into, or purports to enter into, a contract on
behalf of, or for the benefit of, a proposed co-operative, the
10 co-operative becomes bound by the contract and entitled to its
benefit if the co-operative, or a co-operative that is reasonably
identifiable with it, is registered and ratifies the contract --
(a) within a reasonable period after the contract is entered
into; or
15 (b) within any period agreed to by the parties to the
contract.
(2) The person is released from any liability under the
pre-registration contract if the co-operative enters into another
contract in substitution for it --
20 (a) within a reasonable period after the pre-registration
contract is entered into; or
(b) within any period agreed to by the parties to the
pre-registration contract.
(3) The person is liable to pay damages to each other party to the
25 pre-registration contract if the co-operative is not registered, or
the co-operative is registered but does not ratify the contract or
enter into a substitute for it --
(a) within a reasonable period after the contract is entered
into; or
30 (b) within the period agreed to by the parties to the contract.
page 38
[Draft Bill for public comment]
Co-operatives Bill 2006
Legal capacity and powers Part 3
Pre-registration contracts Division 5
s. 55
(4) The maximum amount of damages the person is liable to pay to
a party is the amount the co-operative would be liable to pay to
the party if the co-operative had been registered and had ratified
the contract and then completely failed to perform it.
5 (5) If proceedings are brought to recover damages under
subsection (3) because the co-operative is registered but does
not ratify the pre-registration contract or enter into a substitute
for it, the court may do anything that it thinks just in the
circumstances, including ordering the co-operative --
10 (a) to pay all or part of the damages that the person is liable
to pay; or
(b) to transfer property that the co-operative received
because of the contract to a party to the contract; or
(c) to pay an amount to a party to the contract.
15 (6) If the co-operative ratifies the pre-registration contract but fails
to perform all or part of it, the court may order the person to pay
all or part of the damages that the co-operative is ordered to pay.
55. Person may be released from liability but is not entitled to
indemnity
20 (1) Any of the parties to the pre-registration contract may release
the person who entered into, or purported to enter into, the
contract from any liability in relation to that contract.
(2) The release must be in writing.
(3) The party giving the release is not entitled to recover damages
25 under section 54 from the person.
(4) Despite any rule of law or equity, the person does not have a
right of indemnity against the co-operative in respect of the
person's liability under this Division even if the person was
acting, or purporting to act, as trustee for the co-operative.
page 39
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 3 Legal capacity and powers
Division 5 Pre-registration contracts
s. 56
56. This Division replaces other rights and liabilities
This Division replaces any rights or liabilities anyone would
otherwise have in relation to the pre-registration contract.
page 40
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
General Division 1
s. 57
Part 4 -- Membership
Division 1 -- General
57. Becoming a member
(1) On the registration of a co-operative, the persons who signed the
5 application for registration become members of the
co-operative.
(2) Other persons may be admitted as members of the co-operative
as provided by its rules.
(3) A person under 18 years of age may be admitted as a member of
10 the co-operative unless the rules of the co-operative provide
otherwise.
(4) A corporation is not, merely because it is a corporation,
disqualified from being a member of a co-operative unless the
co-operative's rules provide that corporations are disqualified
15 from being members.
(5) If 2 or more co-operatives merge, the members of the merged
co-operative are --
(a) the members of the merging co-operatives; and
(b) other persons admitted as members of the merged
20 co-operative in accordance with its rules.
58. Members of co-operative group
(1) The members of a co-operative group are --
(a) the co-operatives by which the co-operative group is
formed; and
25 (b) any other co-operative, admitted to membership in
accordance with the rules of the co-operative group; and
(c) any other corporation or other body admitted to
membership in accordance with subsection (2).
page 41
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 1 General
s. 59
(2) A corporation or other body, not being a co-operative, may be
admitted to membership of the co-operative group if --
(a) it is incorporated or registered under any other law,
whether or not a law of this State; and
5 (b) in the opinion of the board of the co-operative group, it
is designed to function in accordance with co-operative
principles; and
(c) it is eligible to be admitted to membership in accordance
with the rules of the co-operative group.
10 59. Qualification for membership and transitional provision
(1) Subject to subsection (3), a person is not qualified to be
admitted to membership of a co-operative unless --
(a) there are reasonable grounds for believing that the
person will be an active member of the co-operative;
15 and
(b) the person is otherwise eligible under the rules of the
co-operative.
(2) The rules of a co-operative must contain provisions that --
(a) impose a duty on all persons who become members to
20 be active members; and
(b) explain the consequences of failing to be or ceasing to
be an active member.
(3) A person who was a member of a corporation immediately
before that corporation became a transferred co-operative is
25 qualified to be admitted to membership of the co-operative
despite the absence of reasonable grounds for believing that the
person will be an active member of the co-operative.
60. Membership may be joint
Membership of a co-operative may be individual and, unless the
30 rules of the co-operative provide otherwise, may be joint.
page 42
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
General Division 1
s. 61
61. Members under 18 years of age
(1) A member of a co-operative is not entitled to avoid any
obligation or liability as a member under any contract, deed or
other document entered into as a member on any ground
5 relating to minority.
(2) A person under 18 years of age is not competent to hold an
office in a co-operative.
(3) A member of a co-operative who is under 18 years of age is not
entitled to vote.
10 (4) This section applies only to natural persons.
62. Representatives of corporations
(1) If a corporation is a member of a co-operative, it may by
instrument served on the co-operative appoint a person to
represent it in relation to its membership.
15 (2) The power to appoint a representative is subject to any
restriction imposed by the rules of the co-operative as to the
entitlement of a person to represent a corporation.
(3) A person is not qualified to be appointed the representative of a
company that is not a listed corporation (within the meaning of
20 the Corporations Act) unless the person is an officer, member or
employee of the company.
63. Notification of shareholders and shareholdings
On the request of the board of directors of the co-operative, a
corporation that is a member of the co-operative must make
25 available for inspection by the board of directors of the
co-operative --
(a) a list of the names of all the shareholders of the
corporation and the number of shares held by each
shareholder; or
page 43
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 1 General
s. 64
(b) in the case of a corporation without share capital, a list
of the members of the corporation.
Penalty: a fine of $2 000.
64. Circumstances in which membership ceases -- all
5 co-operatives
(1) A person ceases to be a member of a co-operative in each of
the following circumstances and as otherwise provided by
this Act --
(a) if the member's membership is cancelled under Part 6;
10 (b) if the member is expelled or resigns in accordance with
the rules of the co-operative;
(c) if --
(i) the member becomes bankrupt; or
(ii) the member's property becomes subject to
15 control under the law relating to bankruptcy,
unless provision is made to the contrary in the rules of
the co-operative;
(d) on death;
(e) if the contract of membership is rescinded on the ground
20 of misrepresentation or mistake;
(f) in the case of a member that is a corporation, if the body
is deregistered.
(2) On the death of a member, the member's estate remains liable
under section 68 as the member until the member's personal
25 representative or some other person is registered in the
member's place.
page 44
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
General Division 1
s. 65
65. Additional circumstances in which membership ceases --
co-operatives with share capital
In the case of a co-operative that has a share capital, in addition
to the circumstances in section 64, a member ceases to be a
5 member in each of the following circumstances --
(a) the member's total share is transferred to another person
in accordance with the rules of the co-operative, and the
transferee is registered as holder in the member's place;
(b) the member's total share is forfeited in accordance with
10 this Act or the rules of the co-operative;
(c) the member's total share is sold by the co-operative
under a power conferred by the rules of the co-operative,
and the purchaser is registered as holder in the
member's place;
15 (d) the member's total share is purchased by the
co-operative in accordance with this Act;
(e) the amount paid up on the member's shares is repaid to
the member in accordance with the rules of the
co-operative.
20 66. Carrying on business with too few members
(1) A person who is a director of a co-operative commits an offence
if the person knowingly allows the co-operative to continue to
carry on business with fewer than the minimum number of
members for more than 28 days after the number of members
25 falls below the minimum number.
Penalty: a fine of $2 000.
(2) Each person who is found guilty of an offence under
subsection (1) is also liable to satisfy all obligations of the
co-operative incurred after the 28 days referred to in
30 subsection (1), and may be sued without any other member
being joined in the action.
page 45
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 2 Rights and liabilities of members
s. 67
(3) The minimum number of members allowed is --
(a) for a co-operative group, 2; or
(b) for any other co-operative, 5, or if a lesser number is
prescribed by the regulations, the prescribed number.
5 (4) The Registrar may, by written notice, extend and further extend
in a particular case the period of 28 days referred to in
subsection (1).
(5) An application for an extension must be made --
(a) in a form approved by the Registrar; and
10 (b) before the period to be extended ends.
Division 2 -- Rights and liabilities of members
67. Rights of membership not exercisable until registered etc.
(1) A member of a co-operative is not entitled to exercise any rights
of membership until --
15 (a) the member's name appears as a member in the register
of members, directors and shares referred to in
section 235(1)(a); and
(b) the member has made a payment to the co-operative for
membership or acquired a share or interest that is
20 provided for in the rules of the co-operative.
(2) The board of a co-operative must ensure that the name of a
person admitted to membership is recorded as a member in the
register of members, directors and shares within 28 days after
the person is admitted to membership.
25 Penalty: a fine of $2 000.
68. Liability of members to co-operative
(1) A member of a co-operative is not, as a member, under any
personal liability to the co-operative, except as provided by this
section.
page 46
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Rights and liabilities of members Division 2
s. 69
(2) A member of a co-operative with a share capital is liable to the
co-operative for the amount, if any, unpaid on the shares held by
the member together with any charges payable by the member
to the co-operative as required by the rules of the co-operative.
5 (3) A member of a co-operative without a share capital is liable to
the co-operative for any charges payable by the member to the
co-operative as required by the rules of the co-operative.
69. Co-operative to make information available to person
intending to become a member
10 (1) The board of a co-operative must give written notice to each
person intending to become a member of the co-operative that
the person may request to either inspect at the co-operative's
nearest office, or be sent --
(a) a consolidated copy of the rules of the co-operative; and
15 (b) a copy of all special resolutions applicable to the
member passed by the members of the co-operative,
except special resolutions providing for an alteration of
the rules of the co-operative; and
(c) a copy of the last annual report of the co-operative under
20 section 240.
(2) If a person who has received notice under this section makes a
request referred to in subsection (1), the co-operative must
comply with that request.
70. Entry fees and regular subscriptions
25 (1) The rules of a co-operative may --
(a) require the payment by members of entry fees and
regular subscriptions; and
(b) provide for the repayment of those fees and
subscriptions on a person ceasing to be a member.
page 47
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 2 Rights and liabilities of members
s. 71
(2) The calculation of the amount of a particular member's regular
subscription may be based on the amount of business the
member does with the co-operative.
(3) A co-operative must give a person intending to become a
5 member written notice of entry fees or regular subscriptions
payable by the member to the co-operative.
(4) A person who becomes a member of a co-operative is not liable
to pay entry fees or regular subscriptions except --
(a) those fees or subscriptions of which the person was
10 given written notice before becoming a member; and
(b) any regular subscriptions that may be imposed by any
subsequent alteration of the rules and of which the
member has been given notice.
71. Members etc. may be required to deal with co-operative
15 (1) The rules of a co-operative may contain provisions that require
a member to have specified dealings with the co-operative for a
fixed period and to enter into a contract for that purpose.
(2) A co-operative may, if authorised by its rules, make a contract
with a member containing provisions that require the member to
20 have specified dealings with the co-operative for a fixed period.
(3) In particular, the provisions of the rules or a contract may
require a member --
(a) to sell products through or to the co-operative; or
(b) to obtain supplies or services through or from the
25 co-operative; or
(c) to pay to the co-operative a stated amount as liquidated
damages for any failure to comply with a requirement
authorised by this section.
(4) An amount required to be paid to the co-operative as liquidated
30 damages is, for the purposes of section 73, a debt payable by the
member to the co-operative.
page 48
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Rights and liabilities of members Division 2
s. 72
(5) A contract authorised by this section is binding on the
co-operative and all other parties even though but for this Act
the contract would be invalid as being in restraint of trade.
(6) Rules authorised by this section are authorised even though, but
5 for this section, the rules might be invalid as being in restraint of
trade.
72. Fines payable by members
(1) A co-operative may impose a fine on a member for an
infringement of the rules of the co-operative if the rules of the
10 co-operative so provide.
(2) A fine imposed under subsection (1) must not exceed the
maximum fine fixed by the rules in accordance with section 99.
(3) A fine must not be imposed unless --
(a) notice of intention to impose the fine and the reason for
15 it has been given to the member; and
(b) the member has been given a reasonable opportunity to
appear before the board in person (with or without
witnesses), or to send to the board a written statement to
show cause why the fine should not be imposed.
20 (4) The co-operative may set off the whole or any part of the fine
against an amount payable to the member for produce delivered
by the member to the co-operative, but no part of the fine is to
be set off against any advance that, in accordance with the rules
of the co-operative, is payable to the member from the
25 co-operative, for produce so delivered.
73. Charge and set off of co-operative
(1) A co-operative has, in relation to a debt payable by a member or
former member to the co-operative, a charge on each of the
following --
30 (a) the share or interest in the capital and the credit balance
and deposits of the member or former member;
page 49
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 2 Rights and liabilities of members
s. 74
(b) any rebate, bonus, dividend or interest payable to the
member or former member;
(c) any entry fees and regular subscriptions required to be
repaid to a member when the member ceases to be a
5 member.
(2) The co-operative may set off any amount paid on account of
that share or other thing, or any amount credited or payable to
the member or former member, in or towards payment of the
debt.
10 (3) The charge created by this section may be enforced by the
appropriation by the co-operative of the thing that is subject to
the charge, but only after at least 7 days notice has been given to
the member or former member.
(4) Any share in respect of which capital has been so appropriated
15 must be cancelled.
74. Repayment of shares on expulsion
(1) When a member is expelled from a co-operative under its rules,
the co-operative must, within one year after the day of
expulsion --
20 (a) repay to the former member an amount (the "repayable
amount") made up of the amount paid up on the shares
held by the member at the day of expulsion, less any
amount owed by the member to the co-operative at the
day of expulsion under the rules of the co-operative or
25 any contract or otherwise; or
(b) apply the repayable amount under subsection (2) if --
(i) the board considers repayment would adversely
affect the financial position of the co-operative;
or
30 (ii) the board and the former member agree.
page 50
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Death of member Division 3
s. 75
(2) The repayable amount may be applied in one of the following
ways --
(a) the co-operative may appropriate the amount as a
donation to the co-operative, but only if the former
5 member consents in writing to the donation;
(b) if the co-operative is a deposit taking co-operative, the
co-operative may apply the amount as a deposit by the
former member with the co-operative, subject to the
requirements of section 131 as to interest on the deposit;
10 (c) the co-operative may issue debentures or co-operative
capital units to the former member in satisfaction of the
amount.
(3) If the balance sheet of the co-operative last issued before the
expulsion of a member of the co-operative disclosed a loss or
15 deficiency, the paid up value of the member's shares may, for
the purposes of calculating the repayable amount, be reduced as
described in subsection (4).
(4) The paid up value of the member's shares may be reduced by an
amount that bears to the amount of the loss or deficiency so
20 disclosed the same proportion as the number of shares held by
the member bore to the total number of shares held by all
members of the co-operative as at the date of expulsion of the
member.
(5) Shares for which capital has been repaid under subsection (1)(a)
25 or applied under subsection (1)(b) must be cancelled.
Division 3 -- Death of member
75. Meaning of "interest"
In this Division --
"interest", of a deceased member in a co-operative, includes --
30 (a) the member's membership; and
(b) any credit balance due to the member; and
page 51
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 3 Death of member
s. 76
(c) any loan from or to or deposit with the co-operative;
and
(d) any surplus arising on the sale by the co-operative as
mortgagee of any property mortgaged by the
5 deceased to the co-operative;
"transfer", of an interest, includes the payment of money.
76. Transfer of share or interest on death of member
Subject to section 163, on the death of a member, the board
must transfer the deceased member's share or interest in the
10 co-operative to --
(a) the personal representative of the deceased member; or
(b) the person that the deceased's personal representative
specifies in an application made to the co-operative
within 3 months after the death of the member.
15 77. Transfer of small shareholdings and interests on death
(1) If the total value of a deceased member's shares or interest in a
co-operative is less than $10 000 (or such other amount as may
be prescribed), the board may, on the basis of such evidence as
it considers sufficient, transfer the shares or interest in
20 accordance with whichever of the following paragraphs is
appropriate --
(a) if the member or person dies testate, to the person who
appears to the board to be entitled to the shares or
interest under the will of the deceased member or
25 person;
(b) if the member or person dies intestate, to any person
who appears to the board to be entitled to obtain a grant
of administration of the estate of the deceased and that
person must then hold the shares or interest on the same
30 trusts as if he or she had obtained that grant.
page 52
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Disputes involving members Division 4
s. 78
(2) A transfer must not be made under this section after evidence
has been produced to the co-operative of the grant of letters of
administration of the estate, or probate of the will, of the
deceased member.
5 78. Value of shares and interests
The value of the shares or interest of a deceased member must
be determined for the purposes of this Division in accordance
with the rules of the co-operative.
79. Co-operative protected
10 Any transfer of property made by the board of a co-operative in
accordance with this Division is valid and effectual against any
demand made on the co-operative by any other person.
Division 4 -- Disputes involving members
80. Grievance procedure
15 (1) The rules of a co-operative must set out a grievance procedure
for dealing with any dispute under the rules --
(a) between a member and another member; and
(b) between a member and the co-operative.
(2) A member may appoint any person to act on behalf of the
20 member in the grievance procedure.
(3) The grievance procedure must allow for natural justice to be
applied.
(4) In this section and section 81 --
"member" includes any person who was a member not more
25 than 6 months before the dispute occurred.
page 53
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 5 Oppressive conduct of affairs
s. 81
81. Application to Supreme Court
(1) The Supreme Court may, on the application of a member of a
co-operative, or a co-operative, make an order declaring and
enforcing --
5 (a) the rights or obligations of members of the co-operative
between themselves; or
(b) the rights or obligations of the co-operative and any
member between themselves.
(2) An order may be made under this section whether or not a right
10 of a proprietary nature is involved and whether or not the
applicant has an interest in the property of the co-operative.
(3) The Supreme Court may refuse to make an order on the
application or may make an order for costs against a party,
whether successful or not, if the Court is of the opinion that --
15 (a) the issue raised in the application is trivial; or
(b) having regard to the importance of the issue, the nature
of the co-operative, any other available method of
resolving the issue, the costs involved, lapse of time,
acquiescence or any other relevant circumstance, it was
20 unreasonable to make the application; or
(c) the unreasonable or improper conduct of a party --
(i) has been responsible for the making of the
application; or
(ii) has added to the cost of the proceedings.
25 Division 5 -- Oppressive conduct of affairs
82. Interpretation
In this Division, a reference to a member of a co-operative
includes, in the case of a co-operative that has a share capital, a
reference to a person to whom a share in the co-operative has
30 been transmitted by will or by operation of law.
page 54
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Oppressive conduct of affairs Division 5
s. 83
83. Application of Division
This Division does not apply in respect of anything done under
Part 6.
84. Who may apply for court order
5 The following persons may apply to the Supreme Court for an
order under this Division --
(a) the Registrar;
(b) a member who believes that the affairs of the
co-operative are being conducted in a way that is --
10 (i) oppressive or unfairly prejudicial to, or unfairly
discriminatory against, a member; or
(ii) contrary to the interests of the members as a
whole;
(c) a member who believes that an act or omission, or a
15 proposed act or omission, by or on behalf of the
co-operative, or a resolution, or a proposed resolution,
of members, was or would be --
(i) oppressive or unfairly prejudicial to, or unfairly
discriminatory against, a member; or
20 (ii) contrary to the interests of the members as a
whole.
85. Orders that the Supreme Court may make
On application under this Division, the Supreme Court may
make any order that it considers appropriate including (without
25 being limited to) one or more of the following orders --
(a) an order that the Registrar appoint an administrator of
the co-operative;
(b) an order that the co-operative be wound up;
(c) an order for regulating the conduct of affairs of the
30 co-operative in the future;
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Co-operatives Bill 2006
Part 4 Membership
Division 5 Oppressive conduct of affairs
s. 86
(d) an order for the repayment of the member's shares in
accordance with the provisions of this Act for repayment
of share capital;
(e) an order for the purchase of the shares of any member
5 by the co-operative and for the reduction accordingly of
the co-operative's capital;
(f) an order directing the co-operative to institute,
prosecute, defend or discontinue specified proceedings,
or authorising a member or members of the co-operative
10 to institute, prosecute, defend or discontinue specified
proceedings in the name and on behalf of the
co-operative;
(g) an order appointing a receiver or a receiver and manager
of property of the co-operative;
15 (h) an order restraining a person from engaging in specified
conduct or from doing a specified act or thing;
(i) an order directing a co-operative to become registered as
a company under the Corporations Act;
(j) an order requiring a person to do a specified act or thing;
20 (k) an order as to costs.
86. Basis on which Supreme Court makes orders
The Supreme Court may make an order under this Division if it
considers that --
(a) the affairs of a co-operative are being conducted in a
25 way that is --
(i) oppressive or unfairly prejudicial to, or unfairly
discriminatory against, a member (the
"oppressed member"), whether or not in the
capacity of a member; or
30 (ii) contrary to the interests of the members as a
whole;
or
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[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Oppressive conduct of affairs Division 5
s. 87
(b) an act or omission, or a proposed act or omission, by or
on behalf of a co-operative, or a resolution, or a
proposed resolution, of members of a co-operative, was
or would be --
5 (i) oppressive or unfairly prejudicial to, or unfairly
discriminatory against, a member (the
"oppressed member") whether or not in the
capacity of a member; or
(ii) contrary to the interests of the members as a
10 whole.
87. Winding up need not be ordered if oppressed members
prejudiced
The Supreme Court need not make an order under this Division
for the winding up of a co-operative if the Court considers that
15 the winding up of the co-operative would unfairly prejudice an
oppressed member.
88. Application of winding up provisions
If an order that a co-operative be wound up is made under this
Division, the provisions of this Act relating to the winding up of
20 co-operatives apply, with any changes that are necessary, as if
the order had been made on an application filed in the Supreme
Court by the co-operative.
89. Changes to rules
(1) If an order under this Division makes an alteration to the rules
25 of a co-operative --
(a) the alteration has effect as if it had been properly made
by special resolution of the co-operative; and
(b) the co-operative must not (despite any other provisions
of this Act) without the leave of the Supreme Court
30 make any further alteration to the rules inconsistent with
the provisions of the order.
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Co-operatives Bill 2006
Part 4 Membership
Division 6 Proceedings on behalf of a co-operative by members and
others
s. 90
(2) On receiving a copy of an order altering the rules of a
co-operative the Registrar must register the alteration.
90. Copy of order to be lodged with Registrar
An applicant for an order under this Division must lodge an
5 office copy of the order with the Registrar within 14 days after
it is made.
Penalty: a fine of $1 000.
Division 6 -- Proceedings on behalf of a co-operative by
members and others
10 91. Bringing, or intervening in, proceedings on behalf of a
co-operative
(1) A person may bring proceedings on behalf of a co-operative, or
intervene in proceedings to which a co-operative is a party for
the purpose of taking responsibility on behalf of the
15 co-operative for those proceedings, or for a particular step in
those proceedings, (for example, compromising or settling
them), if --
(a) the person is --
(i) a member, former member, or person entitled to
20 be registered as a member, of the co-operative or
of a related corporation; or
(ii) an officer or former officer of the co-operative;
or
(iii) the Registrar;
25 and
(b) the person is acting with leave granted under section 92.
(2) Proceedings brought on behalf of a co-operative may be brought
in the co-operative's name.
page 58
[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Proceedings on behalf of a co-operative by members and Division 6
others
s. 92
92. Applying for and granting leave
(1) A person referred to in section 91(1)(a) may apply to the
Supreme Court for leave to bring, or to intervene in,
proceedings.
5 (2) The Supreme Court may grant the application if it is satisfied
that --
(a) it is probable that the co-operative will not itself bring
the proceedings, or properly take responsibility for
them, or for a step in them; and
10 (b) the applicant is acting in good faith; and
(c) it is in the best interests of the co-operative that the
applicant be granted leave; and
(d) if the applicant is applying for leave to bring
proceedings, there is a serious question to be tried; and
15 (e) either --
(i) at least 14 days before making the application,
the applicant gave written notice to the
co-operative of the intention to apply for leave
and of the reasons for applying; or
20 (ii) it is appropriate to grant leave even if
subparagraph (i) is not satisfied.
93. Substitution of another person for the person granted leave
(1) Any of the following persons may apply to the Supreme Court
for an order that they be substituted for a person to whom leave
25 has been granted under section 92 --
(a) a member, former member, or person entitled to be
registered as a member, of the co-operative or a related
corporation;
(b) an officer, or former officer, of the co-operative;
30 (c) the Registrar.
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Co-operatives Bill 2006
Part 4 Membership
Division 6 Proceedings on behalf of a co-operative by members and
others
s. 94
(2) The application may be made whether or not the other person
has already brought the proceedings or made the intervention.
(3) The Supreme Court may make the order if it is satisfied that --
(a) the applicant is acting in good faith; and
5 (b) in all the circumstances, it is appropriate to make the
order.
(4) An order substituting one person for another person has the
effect that --
(a) the grant of leave is taken to have been made in favour
10 of the substituted person; and
(b) if the other person has already brought the proceedings
or intervened, the substituted person is taken to have
brought those proceedings or to have made that
intervention.
15 94. Effect of ratification by members
(1) A ratification or approval of conduct by members of a
co-operative --
(a) does not prevent a person from bringing or intervening
in proceedings with leave under section 92 or from
20 applying for leave under that section; and
(b) does not have the effect that proceedings brought or
intervened in with leave under section 92 must be
decided in favour of the defendant, or that an application
for leave under that section must be refused.
25 (2) The Supreme Court may take into account a ratification or an
approval of the conduct by members of a co-operative in
deciding what order or judgment (including as to damages) to
make in proceedings brought or intervened in with leave under
section 92 or in relation to an application for leave under that
30 section.
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[Draft Bill for public comment]
Co-operatives Bill 2006
Membership Part 4
Proceedings on behalf of a co-operative by members and Division 6
others
s. 95
(3) In taking a ratification or approval into account under
subsection (2), the Supreme Court may have regard to --
(a) how well-informed about the conduct the members were
when deciding whether to ratify or approve that conduct;
5 and
(b) whether the members who ratified or approved the
conduct were acting for proper purposes.
95. Leave to discontinue, compromise or settle proceedings
brought, or intervened in, with leave
10 Proceedings brought or intervened in with leave must not be
discontinued, compromised or settled without the leave of the
Supreme Court.
96. General powers of the Supreme Court
(1) The Supreme Court may make any order, and give any
15 direction, that it thinks just in relation to proceedings brought or
intervened in with leave, or in relation to an application for
leave, including --
(a) interim orders; and
(b) directions about the conduct of the proceedings,
20 including requiring mediation; and
(c) an order directing the co-operative, or an officer of the
co-operative, to do, or not to do, any act; and
(d) an order appointing an independent person to
investigate, and report to the Supreme Court, on --
25 (i) the financial affairs of the co-operative; or
(ii) the facts or circumstances that gave rise to that
cause of action the subject of the proceedings; or
(iii) the costs incurred in the proceedings and the
person granted leave.
30 (2) A person appointed by the Supreme Court under
subsection (1)(d) is entitled, on giving reasonable notice to the
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[Draft Bill for public comment]
Co-operatives Bill 2006
Part 4 Membership
Division 6 Proceedings on behalf of a co-operative by members and
others
s. 97
co-operative, to inspect and make copies of any books of the
co-operative for any purpose connected with their appointment.
97. Power of Supreme Court to make costs order
At any time, the Supreme Court may, in relation to proceedings
5 brought or intervened in with leave under section 92 or an
application for leave under that section, make any orders it
thinks just about the costs of the person who applied for or was
granted leave, of the co-operative or of any other party to the
proceedings or application, including an order requiring
10 indemnification for costs.
page 62
[Draft Bill for public comment]
Co-operatives Bill 2006
Rules Part 5
s. 98
Part 5 -- Rules
98. Effect of rules
(1) The rules of a co-operative have the effect of a contract under
seal --
5 (a) between the co-operative and each member; and
(b) between the co-operative and each director, the principal
executive officer and the secretary of the co-operative;
and
(c) between a member and each other member.
10 (2) Under the contract, each of those persons agrees to observe and
perform the provisions of the rules as in force for the time being
so far as those provisions apply to that person.
99. Content of rules
(1) The rules of a co-operative must state or otherwise make
15 provision for the matters specified in Schedule 1.
(2) The rules must be divided into paragraphs numbered
consecutively.
(3) The rules may state the objects of the co-operative.
(4) The rules may incorporate any provision of the model rules.
20 (5) The rules may provide for the co-operative to impose a fine,
payable to the co-operative, on a member for an infringement of
the rules.
(6) If the rules provide for the imposition of a fine, the rules must
specify the maximum fine that may be imposed on a member.
25 (7) The maximum fine fixed by the rules must not be more than an
amount prescribed by the regulations as the maximum fine.
(8) The rules may contain other provisions not inconsistent with
this Act.
page 63
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 5 Rules
s. 100
100. Purchase and inspection of copy of rules
(1) A member is entitled to obtain from a co-operative a copy of its
rules on payment of the amount required by the rules of the
co-operative or, if the rules do not prescribe an amount, on
5 payment of $5.
(2) The amount required by the rules must not be more than the fee
prescribed by the regulations for obtaining a copy of the rules
from the Registrar.
(3) A person is entitled to obtain from the Registrar a copy of the
10 rules of a co-operative on payment of the fee prescribed by the
regulations.
101. False copies of rules
(1) A person who gives to a member of a co-operative or to a
person intending or applying to become a member of a
15 co-operative a copy of any rules or any alterations of rules,
other than those which have been duly registered, representing
that they are binding on the members of the co-operative is
guilty of an offence.
Penalty: a fine of $1 000.
20 (2) A person who alters any of the rules of a co-operative after they
have been registered and circulates them representing that they
have been duly registered when they have not been is guilty of
an offence.
Penalty: a fine of $1 000.
25 102. Model rules
(1) The regulations may prescribe model rules.
(2) The model rules may make provision for any matter for which
the rules of a co-operative may make provision.
(3) If the model rules provide for a matter and the rules of a
30 co-operative of the class to which the model rules apply do not
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[Draft Bill for public comment]
Co-operatives Bill 2006
Rules Part 5
s. 103
provide for that matter, the provision of the model rules relating
to that matter is to be taken to be included in the rules of the
co-operative.
103. Rules can only be altered in accordance with this Act
5 The rules of a co-operative cannot be altered except in
accordance with this Act.
104. Approval of alteration of rules
(1) A proposed alteration of the rules of a co-operative must be
approved by the Registrar before the resolution altering the rules
10 is passed by the co-operative or the board of the co-operative.
(2) A draft of the proposed alteration must be submitted to the
Registrar at least 21 days (or a shorter period the Registrar may
allow in a particular case) before --
(a) the notice of the proposed special resolution altering the
15 rules is due to be given to the members by the
co-operative; or
(b) the resolution is due to be passed by the board of the
co-operative.
(3) The proposed alteration submitted under subsection (2) must be
20 accompanied by a written statement specifying the date on
which the notice is due to be given to members or the resolution
is due to be passed by the board, as the case may be.
(4) The proposed alteration must --
(a) be in accordance with section 99; and
25 (b) be in a form that may reasonably be approved; and
(c) be accompanied by a statement setting out the reasons
for the alteration.
(5) The Registrar may --
(a) approve the proposed alteration as submitted; or
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Co-operatives Bill 2006
Part 5 Rules
s. 105
(b) approve a different alteration to that submitted; or
(c) refuse to approve the proposed alteration.
(6) Subject to subsection (7), the Registrar approves a proposed
alteration by giving written notice of the approval to the
5 co-operative.
(7) The Registrar is taken to have approved a proposed alteration as
submitted to the Registrar unless at least 5 days before the date
specified in the written statement submitted under
subsection (3), the Registrar gives written notice to the
10 co-operative that the Registrar --
(a) has approved a different alteration to that submitted; or
(b) has refused to approve the proposed alteration; or
(c) is still considering the matter.
105. Alteration by special resolution
15 The rules of a co-operative must be altered by special resolution
unless this Act provides otherwise.
106. Alteration by resolution of board
(1) The rules of a co-operative may be altered by a resolution
passed by the board if the alteration does no more than give
20 effect to a requirement, restriction or prohibition imposed under
the authority of this Act.
(2) If the rules of a co-operative are altered under this section, the
co-operative must cause the alteration to be notified in writing
to its members as soon as practicable after the alteration takes
25 effect and in any event not later than the day when notice is
given to the members of the next annual general meeting of the
co-operative after the alteration takes effect.
page 66
[Draft Bill for public comment]
Co-operatives Bill 2006
Rules Part 5
s. 107
107. Alteration does not take effect until registered
(1) An alteration of the rules of a co-operative does not take effect
unless and until it is registered by the Registrar.
(2) An application for registration of an alteration must --
5 (a) be made in a form approved by the Registrar; and
(b) be made within 28 days, or a shorter or longer period
prescribed by the regulations, after the resolution to alter
the rules is passed; and
(c) be accompanied by a consolidated copy of the rules of
10 the co-operative, including the alteration.
(3) The Registrar must register the alteration unless --
(a) the Registrar is satisfied that the alteration is contrary to
this Act; or
(b) the Registrar has other reasonable cause to refuse to
15 register the alteration.
(4) A certificate of registration of an alteration of the rules of a
co-operative given by the Registrar is, in favour of any person
advancing money to the co-operative on the faith of the
certificate or in favour of any guarantor of that advance,
20 evidence that the alteration in the rules was properly made.
108. Appeal against refusal to approve alteration
A co-operative may appeal to the Supreme Court against a
failure of the Registrar to approve an alteration of its rules.
109. Appeal against refusal to register
25 A co-operative may appeal to the Supreme Court against a
failure of the Registrar to register an alteration of its rules.
110. Supreme Court's powers on appeal
The Supreme Court may make any order it considers
appropriate to dispose of an appeal under section 108 or 109.
page 67
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 6 Active membership
Division 1 Definitions
s. 111
Part 6 -- Active membership
Division 1 -- Definitions
111. Meaning of "active membership resolution"
In this Part --
5 "active membership resolution" has the meaning given in
section 113(2).
112. What is active membership
For the purposes of this Act, a member of a co-operative is an
active member of the co-operative if the member --
10 (a) uses or supports an activity of, or maintains a
relationship or an arrangement with, the co-operative,
for carrying on a primary activity of the co-operative, in
the way and to the extent that the rules of the
co-operative provide is sufficient to establish active
15 membership; or
(b) maintains any other relationship or arrangement with the
co-operative for carrying on a primary activity of the
co-operative that the regulations provide is sufficient to
establish active membership.
20 113. What are active membership provisions and resolutions
(1) Active membership provisions in the rules of a co-operative are
provisions in the rules that state --
(a) which of the activities of the co-operative are the
primary activities of the co-operative; and
25 (b) the way in which and the extent to which a member of
the co-operative must use or support an activity of, or
maintain a relationship or an arrangement with, the
co-operative for carrying on a primary activity of the
co-operative, in order to establish active membership of
30 the co-operative.
page 68
[Draft Bill for public comment]
Co-operatives Bill 2006
Active membership Part 6
Rules to contain active membership provisions Division 2
s. 114
(2) An active membership resolution is a resolution that would, if
given effect to, make or amend active membership provisions in
the rules of a co-operative.
Division 2 -- Rules to contain active membership provisions
5 114. Number of primary activities required
A co-operative must have at least one primary activity.
115. Rules to contain active membership provisions
The board of a co-operative must ensure that the rules of the
co-operative contain active membership provisions in
10 accordance with this Part.
116. Factors and considerations for determining primary
activities etc.
(1) The board of a co-operative must ensure that the relevant factors
and considerations are taken into account in deciding --
15 (a) which of the activities of a co-operative are its primary
activities; and
(b) the way and extent to which a member is required to use
or support an activity of, or maintain a relationship or an
arrangement with, a co-operative, for carrying on a
20 primary activity of the co-operative, in order to establish
active membership of the co-operative.
(2) The relevant factors and considerations are --
(a) the primary activity or, if more than one, the primary
activities taken together must form the basic purpose for
25 which the co-operative exists and a significant
contribution to the business of the co-operative; and
(b) the way and extent of the required utilisation, support,
relationship or arrangement should be reasonable when
considered in relation to the activities of the
30 co-operative as a whole; and
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Co-operatives Bill 2006
Part 6 Active membership
Division 2 Rules to contain active membership provisions
s. 117
(c) any other factors and considerations that are prescribed
by the regulations.
(3) The regulations may --
(a) provide for the matters to be taken into account in
5 deciding whether an activity makes a significant
contribution to the business of the co-operative; and
(b) specify minimum percentages of turnover, minimum
amounts of income or minimum amounts of business
necessary to constitute that significant contribution.
10 (4) Nothing in this section limits the right of active members other
than the board of the co-operative to propose an active
membership resolution.
117. Active membership provisions -- trading co-operatives
The only active membership provisions that are permitted to be
15 contained in the rules of a trading co-operative are --
(a) provisions requiring a member to use an activity of the
co-operative for carrying on a primary activity specified
in the provisions to establish active membership; and
(b) any other active membership provisions that the
20 Registrar may approve.
118. Regular subscription -- active membership of non-trading
co-operative
(1) Active membership provisions for a non-trading co-operative
may provide that the payment of a regular subscription by a
25 member of the co-operative, to be applied to a primary activity
of the co-operative, is sufficient to establish active membership
of the co-operative.
(2) A member of a co-operative who would, on payment of the
subscription, be an active member of a co-operative is taken to
30 be an active member until the subscription is payable.
page 70
[Draft Bill for public comment]
Co-operatives Bill 2006
Active membership Part 6
Active membership resolutions Division 3
s. 119
Division 3 -- Active membership resolutions
119. Notice of meeting
(1) At least 21 days notice must be given to members of a
co-operative of a meeting at which an active membership
5 resolution is to be proposed.
(2) The notice must, in addition to the other matters required under
this Act to be stated --
(a) state whether the member is eligible to vote on the
resolution; and
10 (b) contain the full text of the proposed resolution; and
(c) contain a copy of section 123.
(3) If the notice to a member states that he or she is not eligible to
vote on a resolution, the member may, after endeavouring to
settle the matter with the co-operative, apply to the Registrar for
15 a determination as to the member's eligibility.
(4) The Registrar may determine the matter, on the information
available to the Registrar, by direction in writing to the
co-operative and the member.
(5) The Registrar's determination as to eligibility has effect but
20 only if given before the meeting concerned is due to be held.
120. Eligibility to vote on active membership resolution
The only members of a co-operative who are eligible to vote on
an active membership resolution when the rules do not contain
active membership provisions are the members who would be
25 active members if the resolution had already taken effect.
page 71
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 6 Active membership
Division 4 Cancellation of membership of inactive or missing members
s. 121
121. Eligibility of directors to vote on proposal at board meeting
If the board of a co-operative is meeting to consider a proposal
to submit an active membership resolution to a meeting of the
co-operative --
5 (a) subject to paragraph (b), a director is only eligible to
vote on the proposal if he or she would be eligible to
vote on the resolution at the meeting of the co-operative;
or
(b) if 2 directors or less, whether or not they are present at
10 the meeting of the board, would be eligible to vote on
the resolution at the meeting of the co-operative, all the
directors are eligible to vote on that proposal at the
meeting of the board.
122. Other entitlements of members not affected
15 A provision of this Division that renders a member of a
co-operative ineligible to vote on a resolution does not affect
any other right, entitlement, obligation or duty of the member as
a member.
Division 4 -- Cancellation of membership of inactive or
20 missing members
123. Cancellation of membership of inactive or missing member
and transitional provision
(1) In this section --
"required period", in relation to a co-operative, means --
25 (a) 3 years; or
(b) a shorter period if specified in the rules of the
co-operative.
page 72
[Draft Bill for public comment]
Co-operatives Bill 2006
Active membership Part 6
Cancellation of membership of inactive or missing members Division 4
s. 124
(2) Unless this subsection does not apply because of subsection (3),
the board of a co-operative must declare the membership of a
member cancelled if --
(a) the whereabouts of the member are not presently known
5 to the co-operative and have not been known to the
co-operative for at least the required period before that
time; or
(b) the member is not presently an active member of the
co-operative and has not been an active member of the
10 co-operative at any time during the required period
immediately before that time.
(3) Subsection (2) applies to a member only if he or she was a
member of the co-operative throughout the required period.
(4) Subsection (2)(b) does not apply to a transferred co-operative
15 until a period of 3 years has passed since the co-operative was
registered under this Act.
(5) Whether a member was an active member at a particular time in
the past is to be decided by reference to the active membership
provisions in force at that time.
20 (6) The board's declaration under this section has the effect of
cancelling the membership concerned.
(7) A person may apply to the Supreme Court for an order under
section 129 in relation to the cancellation of the person's
membership under this section.
25 124. Share to be forfeited if membership cancelled
(1) If a co-operative has a share capital, the board of the
co-operative must declare the shares of a member to be forfeited
at the same time as the member's membership is cancelled
under section 123.
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Co-operatives Bill 2006
Part 6 Active membership
Division 4 Cancellation of membership of inactive or missing members
s. 125
(2) The board's declaration has the effect of forfeiting the shares
concerned.
(3) Nothing in this section affects the operation of section 130.
125. Failure to cancel membership -- offence by director
5 If the board of a co-operative fails to cancel the membership of
a member as required by this Part, a director of the co-operative
who did not use all due diligence to prevent the failure commits
an offence.
Penalty: a fine of $2 000.
10 126. Deferral of forfeiture by board
(1) The board of a co-operative may by resolution defer
cancellation of a member's membership for a period of up to
12 months (the "deferral period") --
(a) if the board has reasonable grounds to believe that a
15 member has ceased to be an active member because of
unusual circumstances that prevent the member
fulfilling his or her active membership obligations; or
(b) if --
(i) the board thinks that during the deferral period
20 an active membership resolution may be put to
the members of the co-operative; and
(ii) the effect of the resolution would be relevant to
the question of whether the member is an active
member.
25 (2) The board of the co-operative must review the resolution to
defer within the deferral period to determine if a further
resolution should be made under subsection (1).
page 74
[Draft Bill for public comment]
Co-operatives Bill 2006
Active membership Part 6
Cancellation of membership of inactive or missing members Division 4
s. 127
127. Cancellation of membership prohibited in certain
circumstances
Unless the regulations otherwise provide, the board of a
co-operative must not declare the membership of a member to
5 be cancelled under this Part --
(a) if the co-operative is insolvent; or
(b) if the co-operative is under administration under the
Corporations Act Part 5.3A as applying under this Act;
or
10 (c) if a compromise or an arrangement is being
administered in relation to the co-operative; or
(d) if the co-operative is in the course of being wound-up;
or
(e) if an appointment of a receiver, whether or not a receiver
15 and manager, of any property of the co-operative is in
force; or
(f) if the co-operative has, for the purposes of being
registered as a company under the Corporations Act,
lodged with the Registrar a copy of the entry made in
20 the minute book of the co-operative under section 190;
or
(g) in other circumstances as may be prescribed by the
regulations.
128. Notice of intention to cancel membership
25 (1) Unless subsection (2) applies, the board of a co-operative must
ensure that not less than 28 days notice of its intention to
declare the membership of a member to be cancelled is given to
the member.
(2) Notice is not required to be given under this section if --
30 (a) the member's whereabouts are unknown to the
co-operative; and
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Part 6 Active membership
Division 4 Cancellation of membership of inactive or missing members
s. 129
(b) the amount required to be repaid to the member in
relation to the cancelled membership, whether because
of the cancellation of shares or otherwise, does not
exceed the amount prescribed by the regulations, or if an
5 amount is not prescribed, $50.
129. Order of Supreme Court against cancellation
(1) If the Supreme Court is satisfied that the cancellation of a
member's membership under section 123 was or would be
unreasonable, the Court may by order direct that the
10 membership should not have been cancelled or should not be
cancelled.
(2) While an order is in force under this section --
(a) the membership concerned is not required to be
cancelled and any shareholding of the member is not
15 required to be forfeited; and
(b) the person whose membership was cancelled is entitled
to be reinstated as a member of the co-operative with all
the rights and entitlements, including any shareholding,
attaching to or arising from the former membership.
20 (3) Reinstatement of a member under this section is to be effected
in accordance with the directions of the Supreme Court.
130. Repayment of amounts due because of cancelled
membership
(1) If the membership of a member of a co-operative is cancelled
25 under this Part, the co-operative must, within 12 months after
the date of cancellation --
(a) repay to the former member an amount (the "repayable
amount") made up of the amount paid up on the shares
forfeited by the member at the time of cancellation less
30 any amount owed by the member to the co-operative at
that time under the rules of the co-operative or any
contract or otherwise; or
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Active membership Part 6
Cancellation of membership of inactive or missing members Division 4
s. 130
(b) apply the repayable amount under subsection (2) if --
(i) the board considers that repayment would
adversely affect the financial position of the
co-operative; or
5 (ii) the board and the former member agree;
or
(c) in the case of a transferred co-operative the rules of
which state how to calculate the amount owing to a
former member at the time of cancellation of
10 membership, repay to the former member an amount in
accordance with those rules.
(2) The repayable amount may be applied in one of the following
ways --
(a) if the co-operative is a deposit-taking co-operative, the
15 co-operative may apply the amount as a deposit by the
former member with the co-operative, subject to the
requirements of section 131 as to interest on the deposit;
(b) the co-operative may issue debentures or co-operative
capital units to the former member in satisfaction of the
20 amount;
(c) the co-operative may appropriate the amount as a
donation to the co-operative, but only if the former
member consents in writing to the donation.
(3) If the balance sheet of the co-operative last issued before the
25 cancellation of a member's membership disclosed a loss or
deficiency, the paid up value of the member's shares may, for
the purposes of calculating the repayable amount, be reduced as
described in subsection (4).
(4) The paid up value of the member's shares may be reduced by an
30 amount that bears to the amount of the loss or deficiency so
disclosed the same proportion as the number of shares held by
the member bore to the total number of shares held by all
members of the co-operative at the time of cancellation.
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Part 6 Active membership
Division 4 Cancellation of membership of inactive or missing members
s. 131
(5) If the former member is subsequently readmitted to
membership, any amount held by the co-operative under this
section must, if the member so requests, be applied towards the
cost of admission to membership, including any subscription for
5 share capital.
(6) If --
(a) the co-operative cannot, after taking all reasonable
action, find the former member; and
(b) the amount otherwise required to be paid under this
10 section is less than the amount prescribed by the
regulations, or if an amount is not prescribed, $50,
the co-operative may retain that amount.
131. Interest on deposits, debentures and co-operative capital
units
15 (1) This section applies when --
(a) the amount payable to a former member under
section 74 or 130 is applied as a deposit with the
co-operative; or
(b) the co-operative allots or issues debentures or
20 co-operative capital units to the former member in
satisfaction of that amount.
(2) The deposit, debenture or co-operative capital unit bears interest
during any period --
(a) in the case of a co-operative with share capital --
25 (i) at the rate, or if there is more than one rate, at the
higher or highest rate, of dividend payable for
that period on the share capital of the
co-operative; or
(ii) if the rate of dividend payable for that period has
30 not been determined, at the rate, or the higher or
highest rate, payable for the immediately
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Active membership Part 6
Cancellation of membership of inactive or missing members Division 4
s. 132
preceding period for which a rate has been
decided; or
(iii) if a rate of dividend has never been determined
in relation to the share capital of the
5 co-operative, at the rate that the board of the
co-operative considers reasonable;
or
(b) in the case of a co-operative without share capital, at the
rate that the board of the co-operative considers
10 reasonable; or
(c) if the rules provide for a rate to be payable that is higher
than the rate applicable under paragraph (a) or (b), at
that higher rate.
(3) A former member may agree to the rate of interest being less
15 than that which would otherwise be payable under this section
and may agree to no interest being paid.
(4) The following provisions of the Corporations Act, as applied by
section 255 of this Act, do not apply to an allotment or issue of
debentures under this section --
20 (a) Chapter 2L;
(b) Chapter 6D.
132. Repayment of deposits, and redemption of debentures and
co-operative capital units
(1) A deposit, debenture or co-operative capital unit to which an
25 amount payable to a former member is applied under this
Division or section 74(2) is to be repaid or redeemed, as the
case may be, as soon as repayment or redemption would not, in
the opinion of the board, adversely affect the financial position
of the co-operative.
30 (2) The deposit, debenture or co-operative capital unit must in any
case be repaid or redeemed within 10 years, or within any
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Co-operatives Bill 2006
Part 6 Active membership
Division 5 Entitlements of former members of trading co-operatives
s. 133
shorter period that the rules of the co-operative may require,
after cancellation of the member's membership.
133. Register of cancelled memberships
A co-operative must keep a register stating the particulars, as
5 prescribed by the regulations, of persons whose membership has
been cancelled under this Part.
Division 5 -- Entitlements of former members of
trading co-operatives
134. Application of Division
10 This Division only applies to trading co-operatives.
135. Former shareholders to be taken to be shareholders for
certain purposes
(1) Even though a person's shares in a co-operative have been
forfeited under this Part, the person is to be taken to be the
15 holder of shares in the co-operative (the same in all respects as
those that were forfeited) for the following purposes --
(a) the entitlements of a shareholder in relation to the
purchase of shares in the co-operative pursuant to an
offer described in section 294(a), (b) or (c) or the
20 purchase of all the shares in the co-operative, if the offer
or purchase occurs within 2 years after the person's
shares were forfeited;
(b) the entitlement of a shareholder when the co-operative
becomes registered as a company if the relevant special
25 resolution under section 311 is passed within 2 years
after the person's shares were forfeited;
(c) the entitlement of a shareholder to a distribution of
surplus in a winding up of the co-operative that
commences within 2 years after the person's shares were
30 forfeited.
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Active membership Part 6
Entitlements of former members of trading co-operatives Division 5
s. 136
(2) Subsection (1)(a) does not apply to --
(a) an offer described in section 294(a) or (c) that is made
by another co-operative; or
(b) the purchase of all the shares in the co-operative by
5 another co-operative.
(3) Subsection (1)(c) does not apply if the winding up is for the
purposes of a merger under Part 12 Division 1.
(4) For the removal of doubt, it is declared that the entitlement
under subsection (1)(a) of a person whose shares have been
10 forfeited does not include an entitlement to vote on any matter.
(5) This section does not apply to a forfeited shareholding in a
co-operative if section 136 operates to require that forfeited
shareholding to be regarded as a forfeited shareholding in
another co-operative.
15 136. Entitlements of former shareholders on mergers etc.
(1) This section applies when a person's shares in a co-operative
(the "original co-operative") are forfeited under this Part and
within 2 years after that forfeiture --
(a) the original co-operative becomes a subsidiary of
20 another co-operative (the "new co-operative"); or
(b) another co-operative (the "new co-operative") is
created as a result of a merger under Part 12 Division 1
involving the original co-operative; or
(c) the engagements of the original co-operative are
25 transferred to another co-operative (the "new
co-operative") under Part 12 Division 1.
(2) A person referred to in subsection (1) is, for the purposes of the
operation of section 135, and the further operation of this
section, taken to have held shares in the new co-operative and as
30 having had those shares in the new co-operative forfeited under
this Part when the person's shares in the original co-operative
were forfeited.
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Part 6 Active membership
Division 5 Entitlements of former members of trading co-operatives
s. 137
(3) The extent of the forfeited shareholding in the new co-operative
is determined as follows --
(a) if the entitlement of active members of the original
co-operative in the circumstances concerned is solely an
5 entitlement to be allotted shares in the new co-operative,
the forfeited shareholding in the new co-operative is the
shareholding to which the person would have been
entitled had the person's shares in the original
co-operative not been forfeited;
10 (b) in any other case, the forfeited shareholding in the new
co-operative is the shareholding that is the same in all
respects as the forfeited shareholding in the original
co-operative.
(4) The determination under subsection (3)(a) of the person's
15 shareholding in the new co-operative must be made --
(a) solely on the basis of the person's shareholding in the
original co-operative when the shares were forfeited or,
in a further operation of this section in respect of the
person, when the person was first to be regarded as
20 having a forfeited shareholding in the original
co-operative; and
(b) without regard to any additional shareholding in the
original co-operative to which the person would have
become entitled had the shares not been forfeited,
25 whether as a result of any bonus share issue or
otherwise.
137. Set off of amounts repaid etc. on forfeited shares
(1) If a person has an entitlement because of the operation of
section 136, the entitlement operates to end any liability of the
30 co-operative --
(a) to repay to the person under section 130 any amount for
the forfeited shares concerned; or
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Co-operatives Bill 2006
Active membership Part 6
Entitlements of former members of trading co-operatives Division 5
s. 138
(b) in respect of a deposit held by the co-operative, or
debentures allotted or issued to the person, or
co-operative capital units issued under section 130 for
the forfeited shares concerned, except a liability to pay
5 interest that is payable but unpaid.
(2) If an amount has been repaid to a person under section 130
or 132, the amount repaid is to be set off against any entitlement
of the person under section 135 for the forfeited shares
concerned.
10 (3) If the amount repaid cannot be set off against the entitlement
because the entitlement is not, or is only partly, an entitlement
to money, the entitlement is lost unless the person pays to the
co-operative the amount repaid to the person and does so within
the period required under subsection (4).
15 (4) If the circumstances referred to in subsection (3) arise, the
co-operative concerned must --
(a) give written notice of the matter by post to the person
concerned at the person's address last known to the
co-operative, specifying a period of not less than
20 28 days after the notice is given during which any
amount repaid must be paid to the co-operative; and
(b) publish a general notice to that effect in a newspaper
circulating generally in the district in which the
registered office of the co-operative is situated.
25 138. Entitlement to distribution from reserves
A person whose membership of a co-operative has been
cancelled under this Part is taken to still be a member for the
purposes of any distribution from reserves of the co-operative
that takes place within 2 years after the person's membership
30 was cancelled.
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Co-operatives Bill 2006
Part 6 Active membership
Division 5 Entitlements of former members of trading co-operatives
s. 139
139. Regulations may exempt co-operatives from provisions
The regulations may exempt a co-operative from a provision of
this Division.
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Co-operatives Bill 2006
Shares Part 7
Nature of share Division 1
s. 140
Part 7 -- Shares
Division 1 -- Nature of share
140. Nature of share in co-operative
(1) A share or other interest in a co-operative --
5 (a) is personal property; and
(b) is transferable or transmissible as provided by this Act
and the rules of the co-operative; and
(c) is, subject to the rules of the co-operative, capable of
devolution by will or by operation of law.
10 (2) Subject to subsection (1) --
(a) the laws applying to ownership of and dealing with
personal property apply to a share or other interest of a
member in a co-operative as they apply to other
property; and
15 (b) equitable interests in respect of a share or other interest
of a member in a co-operative may be created, dealt with
and enforced as in the case of other personal property.
Division 2 -- Disclosure
141. Disclosure to intending shareholders in trading co-operative
20 (1) The board of a trading co-operative must give a person who
intends to acquire shares in the co-operative and is not already a
shareholder in the co-operative a current disclosure statement
that --
(a) has been approved by the Registrar under section 16(5);
25 or
(b) complies with section 142 and has been lodged by the
co-operative with the Registrar.
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Co-operatives Bill 2006
Part 7 Shares
Division 2 Disclosure
s. 142
(2) The disclosure statement must be given before the person
becomes bound to acquire the shares.
(3) The disclosure statement is in addition to any information
required to be provided to the person under Part 4.
5 (4) A disclosure statement is current until whichever of the
following happens first after the statement is prepared --
(a) a change in the rights or liabilities attaching to any class
of share in the co-operative;
(b) a significant change in the financial position or
10 prospects of the co-operative;
(c) any of the next financial, director's or auditor's reports
required to be prepared under section 230 become
available.
(5) If a disclosure statement stops being a current disclosure
15 statement because of a change referred to in subsection (4)(a)
or (b), the co-operative must, within 14 days after the change --
(a) give the Registrar written notice that the disclosure
statement is no longer current because of a change
referred to in subsection (4)(a) or (b), as the case may
20 be; or
(b) file a current disclosure statement with the Registrar that
complies with section 142.
142. Content of disclosure statement to intending shareholders
(1) A disclosure statement given to a person under section 141(1)
25 must contain --
(a) a statement of the rights and liabilities attaching to
shares; and
(b) a statement that the person may request to either inspect
at the co-operative's nearest office, or be sent --
30 (i) the last annual report of the co-operative under
section 240(2); and
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Shares Part 7
Issues of shares Division 3
s. 143
(ii) any other relevant information about the
financial position and prospects of the
co-operative if there has been a significant
change since the date of the last annual report;
5 and
(c) any other information the Registrar directs.
(2) If a person who has received a disclosure statement makes a
request under subsection (1)(b), the co-operative must comply
with that request.
10 143. Exemptions for disclosure statements
(1) The Registrar may, by order published in the Gazette, exempt
the board of a trading co-operative, or the boards of a class of
trading co-operatives from a requirement under section 141
or 142.
15 (2) An exemption under subsection (1) may be given only if the
Registrar is satisfied that compliance with the requirement
would be inappropriate in the circumstances or would impose an
unreasonable burden.
Division 3 -- Issues of shares
20 144. Shares -- general
(1) The share capital of a co-operative varies in amount according
to the nominal value of shares from time to time subscribed.
(2) Shares are to be of a fixed amount which is to be specified in
the rules of the co-operative.
25 (3) A co-operative may have more than one class of shares
provided the shareholding and the rights of shareholders comply
with the co-operative principles.
(4) Subject to this Part and Part 4, shares must not be issued to a
non-member.
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Co-operatives Bill 2006
Part 7 Shares
Division 3 Issues of shares
s. 145
145. Application of Corporations Act for particular share
subscriptions
(1) If subsection (2) applies to shares of a co-operative, the shares
are declared to be applied Corporations legislation matters for
5 the Corporations (Ancillary Provisions) Act 2001 Part 3 in
relation to the Corporations Act sections 716(2), 722, 723(2),
724(1)(a) and (2)(a) and 734, subject to the following
modifications --
(a) the provisions apply as if a co-operative were a
10 company;
(b) a reference in the provisions to ASIC is to be read as a
reference to the Registrar;
(c) a reference in the provisions to a disclosure document is
to be read as a reference to a disclosure statement, of
15 any type, under this Act;
(d) a reference in the provisions to securities is to be read as
a reference to shares;
(e) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
20 that are prescribed by the regulations.
(2) Shares in a co-operative are subject to the declaration under
subsection (1) if --
(a) the shares are offered to persons who are not
shareholders in the co-operative; or
25 (b) the invitation is made to persons who are not
shareholders in the co-operative.
146. Minimum paid up amount
(1) A share in a co-operative other than a transferred co-operative
must not be allotted unless at least 10% of the nominal value of
30 the share has been paid.
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Co-operatives Bill 2006
Shares Part 7
Issues of shares Division 3
s. 147
(2) Any balance unpaid for shares at the time of allotment must be
paid in a way specified in the rules of the co-operative or
permitted by this Act.
(3) This section does not apply to a bonus share issued under
5 section 151 or 276.
147. Shares not to be issued at a discount
A co-operative must not issue shares at a discount.
148. Issue of shares at a premium
(1) A trading co-operative may issue shares at a premium.
10 (2) A premium may be in the form of cash or other valuable
consideration.
(3) If a trading co-operative issues shares for which it receives a
premium, an amount equal to the total amount or value of the
premiums on the shares must be transferred to a share premium
15 account.
(4) The share premium account is to be treated as paid-up share
capital of the trading co-operative and may be applied in any
one or more of the following ways --
(a) in paying up unissued shares to be issued to members of
20 the co-operative as fully paid bonus shares;
(b) in paying up, in whole or in part, the balance unpaid on
shares previously issued to members of the co-operative;
(c) in the payment of dividends, if those dividends are
satisfied by the issue of shares to members of the
25 co-operative;
(d) in writing off the expenses incurred in establishing the
co-operative;
(e) in providing for the premium payable on redemption of
shares, debentures or co-operative capital units.
page 89
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Co-operatives Bill 2006
Part 7 Shares
Division 3 Issues of shares
s. 149
149. Joint ownership of shares
A share may be held by 2 or more persons jointly, unless the
rules of the co-operative provide otherwise.
150. Members may be required to take up additional shares
5 (1) If authorised by the rules of the co-operative, the board of a
trading co-operative may require a member to take up or
subscribe for additional shares under a proposal approved by a
special resolution of the co-operative.
(2) The board of a trading co-operative may deduct amounts in
10 payment for additional shares from money payable to members
for dealings with the co-operative, under a proposal approved
by a special resolution of the co-operative.
(3) A proposal to require a member to take up or subscribe for
additional shares must --
15 (a) be accompanied by a disclosure statement, approved by
the Registrar, that explains the purpose for which the
funds raised by the issue of the additional shares are to
be used; and
(b) clearly show the total number of additional shares to be
20 issued and the basis on which the shares are to be
apportioned among members; and
(c) be accompanied by a statement informing the member
that the member may inform the board by notice on or
before the date specified in the statement, being a date
25 before the passing of the special resolution, that the
member resigns on the passing of the special resolution.
(4) A proposal to deduct amounts in payment for additional shares
from amounts payable to members for dealings with the trading
co-operative must clearly show --
30 (a) the basis on which the deductions are to be made; and
(b) the time and way of making those deductions.
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Shares Part 7
Issues of shares Division 3
s. 151
(5) A proposal approved under this section is binding on --
(a) all members of the trading co-operative at the date of the
passing of the special resolution, other than a member
who has given a notice of resignation in accordance with
5 subsection (3)(c); and
(b) all persons who become members of the trading
co-operative after that date and before the total number
of shares to be issued under the proposal has been
issued.
10 (6) Sections 16 (except subsection (3)) and 29 apply to the approval
of a disclosure statement under this section with any necessary
changes and in particular as if any reference in section 16 to a
formation meeting were a reference to the special resolution.
(7) This section does not apply to the issue of bonus shares to a
15 member under section 276(2).
151. Bonus share issues
(1) In addition to section 276(2) the rules of a trading co-operative
may authorise the issue of bonus shares to members of the
co-operative if the assets of the co-operative --
20 (a) have been sold at a profit; or
(b) have been revalued at a greater value than that disclosed
before the revaluation in the books of the co-operative.
(2) This section does not apply if the assets were acquired for resale
at a profit.
25 152. Restrictions on bonus shares
Bonus shares issued under section 151 may be issued in
accordance with the rules of the co-operative, subject to the
following restrictions --
(a) each issue must have been approved by a special
30 resolution of the co-operative;
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Co-operatives Bill 2006
Part 7 Shares
Division 3 Issues of shares
s. 153
(b) they are to be issued as fully paid up shares with no
payment required to be made by a member of the
co-operative to whom they are issued;
(c) they are to be issued only for shares of the same class of
5 shares that are fully paid up as at the date of issue of the
bonus shares;
(d) the total nominal value of bonus shares issued by a
co-operative in any one year must not be more than
20%, or another percentage prescribed by the
10 regulations, of the nominal value of the issued share
capital of the co-operative immediately before the date
of issue of the bonus shares.
153. Notice about bonus shares
Notice of the meeting or postal ballot at which a resolution is to
15 be proposed as a special resolution for the purpose of approving
a bonus share issue must be accompanied by --
(a) a statement of the value of the assets concerned as
disclosed in the books of the co-operative before the sale
or revaluation; and
20 (b) if the issue arises from, or partly from, a sale of assets, a
statement of the price for which the assets were sold;
and
(c) if the issue arises from, or partly from, a revaluation of
assets, a certificate of value of the assets, being a
25 certificate given in relation to a valuation made not more
than 12 months before the date of the notice by a person
prescribed by the regulations or a person having
qualifications prescribed by the regulations; and
(d) particulars of acquisitions of shares in the co-operative
30 made within the 3 years immediately preceding the date
of the notice by or on behalf of each of its directors and
his or her spouse and the father, mother, children,
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Co-operatives Bill 2006
Shares Part 7
Beneficial and non-beneficial interest in shares Division 4
s. 154
brothers and sisters of each such director and spouse;
and
(e) a certificate signed by 2 directors of the co-operative
stating that to the best of their knowledge and belief the
5 issue of bonus shares would not be imprudent and that
no circumstances are known to them as to why the issue
should not take place.
Division 4 -- Beneficial and non-beneficial interest in shares
154. Direction to disclose
10 The board of a co-operative may direct a person to disclose
matters as described in section 155 if the person is --
(a) a member of the co-operative; or
(b) a person named in a disclosure made in response to a
previous direction under this section as having a relevant
15 interest in, or having given instructions about, shares in
the co-operative.
155. Disclosure by member of relevant interests and instructions
(1) A person given a direction under section 154 must, unless
subsection (2) applies, disclose to the board --
20 (a) full details of the person's relevant interest in the shares
of the co-operative (the "relevant shares") and of the
circumstances that gave rise to the interest; and
(b) the name and address of each other person who has a
relevant interest in the relevant shares together with full
25 details of --
(i) the nature and extent of the interest; and
(ii) the circumstances that gave rise to the other
person's interest;
and
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Part 7 Shares
Division 4 Beneficial and non-beneficial interest in shares
s. 156
(c) the name and address of each person who has given the
person instructions about --
(i) the acquisition or disposal of the shares; or
(ii) the exercise of any voting or other rights attached
5 to the shares; or
(iii) any other matter relating to the shares,
together with full details of those instructions, including
the date or dates on which they were given.
Penalty: a fine of $3 000.
10 (2) A matter referred to in subsection (1)(b) or (c) need only be
disclosed to the extent to which the matter is ascertainable by
the person required to make the disclosure.
(3) The disclosure must be made within the period of 5 days after
the person is given the direction, unless within that period the
15 person applies in writing to the Registrar for an exemption from
compliance with the direction.
(4) The Registrar may, in writing, exempt a person from complying
with a direction if the Registrar believes the direction is
unjustified.
20 (5) If the Registrar refuses to give an exemption under
subsection (4), the disclosure required by the direction must be
made within the period of 5 days after the person receives
written notice of that refusal.
(6) A board that receives information from a person acting on a
25 direction given to the person by the board must pay to the
person the fee, if any, prescribed by the regulations.
156. Registration as trustee etc. on death of owner of shares
(1) A trustee, executor or administrator of the estate of a dead
person who was the registered holder of a share in a
30 co-operative may be registered as the holder of the share as
trustee, executor or administrator of that estate.
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Shares Part 7
Beneficial and non-beneficial interest in shares Division 4
s. 157
(2) A trustee, executor or administrator of the estate of a dead
person who was entitled in equity to a share in a co-operative
may, with the consent of the co-operative and of the registered
holder of the share, be registered as the holder of the share as
5 trustee, executor or administrator of that estate.
157. Registration as administrator of estate on incapacity of
shareholder
(1) This section applies to a person (the "appointed person") who
is appointed under a law of a State or Territory relating to the
10 administration of the estates of persons who, through mental or
physical infirmity, are incapable of managing their affairs, to
administer the estate of another person (the "incapable
person").
(2) If the incapable person is the registered holder of a share in a
15 co-operative, the appointed person may be registered as the
holder of that share as administrator of the estate of the
incapable person.
(3) If the incapable person is entitled in equity to a share in a
co-operative, the appointed person may, with the consent of the
20 co-operative and of the registered holder of that share, be
registered as the holder of the share as administrator of the
estate of the incapable person.
158. Registration as Official Trustee in Bankruptcy
(1) This section applies when a share in a co-operative that is the
25 property of a bankrupt vests by force of the Commonwealth
Bankruptcy Act 1966 in the Official Trustee in Bankruptcy.
(2) If the bankrupt is the registered holder of the share, the Official
Trustee may be registered as the holder of the share as the
Official Trustee in Bankruptcy.
30 (3) If the bankrupt is entitled in equity to the share, the Official
Trustee may, with the consent of the co-operative and of the
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Part 7 Shares
Division 5 Sale or transfer of shares
s. 159
registered holder of the share, be registered as the holder of the
share as the Official Trustee in Bankruptcy.
159. Liabilities of person registered as trustee or administrator
(1) A person registered under section 156, 157 or 158 is, while so
5 registered, subject to the same liabilities in relation to the share
as those to which the person would have been subject if the
share had remained, or had been, registered in the name of the
dead person, the incapable person or the bankrupt.
(2) The person registered is subject to no other liabilities in relation
10 to the share.
160. Notice of trusts in register of members
Shares held by a trustee under a particular trust may, with the
consent of the co-operative, be marked in the register of
members, directors and shares referred to in section 235(1)(a) in
15 a way that identifies the shares as being held under the trust.
161. No notice of trust except as provided by this Division
Except as provided in this Division --
(a) no notice of a trust, whether express, implied or
constructive, is to be entered on a register or be
20 receivable by the Registrar; and
(b) no liabilities are affected by anything done under this
Division; and
(c) nothing done under this Division affects a co-operative
with notice of a trust.
25 Division 5 -- Sale or transfer of shares
162. Sale or transfer of shares
(1) A share in a co-operative cannot be sold or transferred except --
(a) in accordance with Part 4 Division 3 and section 163, on
the death of a member; or
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Shares Part 7
Sale or transfer of shares Division 5
s. 163
(b) to a person appointed to administer the estate of a
shareholder under a law relating to the administration of
the estates of persons who, through mental or physical
infirmity, are incapable of managing their affairs; or
5 (c) with the consent of the board, to any person if there are
reasonable grounds for believing that the person will be
an active member of the co-operative.
(2) A share in a co-operative cannot be sold or transferred except in
accordance with the rules of the co-operative.
10 163. Transfer on death of member
(1) On the death of a member, the member's share in the
co-operative cannot be transferred to a person other than an
administrator or executor except with the consent of the board
of the co-operative.
15 (2) The board may only give its consent under subsection (1) if
there are reasonable grounds for believing that the person will
be an active member of the co-operative.
164. Restriction on total shareholding
The board of a non-trading co-operative must not consent under
20 section 162(1)(c) to the sale or transfer of a share if, as a result
of the sale or transfer, the nominal value of the shares held by
the purchaser or transferee would --
(a) in the case of a non-trading co-operative, be more
than --
25 (i) 20% of the nominal value of the share capital of
the co-operative; or
(ii) if another percentage is specified in the rules of
the co-operative, that other percentage of the
nominal value of the share capital of the
30 co-operative;
or
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Part 7 Shares
Division 6 Repurchase of shares
s. 165
(b) in the case of a trading co-operative, be more than the
maximum permissible level of share interest applying
under section 283.
165. Transfer not effective until registered
5 A transferor of a share remains the holder of the share until the
transferee is noted as the holder of the share in the register of
members, directors and shares referred to in section 235(1)(a).
166. Non-members become members on registration
Where a share in a co-operative is transferred to a non-member
10 under this Part or Part 4, the transferee becomes a member of
the co-operative on the transferee being noted as a member in
the register of members, directors and shares referred to in
section 235(1)(a).
Division 6 -- Repurchase of shares
15 167. Purchase and repayment of shares
(1) The rules of a co-operative may authorise the co-operative to --
(a) purchase any share of a member in the co-operative at
the request of the member; and
(b) repay to a member, with the member's consent, all or
20 any part of the amount paid up on any share held by the
member when the amount repaid is not required for the
activities of the co-operative.
(2) The amount paid by a co-operative under this section in
purchasing shares or repaying an amount paid up on shares, or
25 both, in any financial year of the co-operative must not be more
than the total of --
(a) 5% of the nominal value of the issued share capital of
the co-operative immediately before the start of that
financial year; and
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Shares Part 7
Repurchase of shares Division 6
s. 168
(b) the amount of any additional share capital of the
co-operative subscribed for during that year.
(3) The members of a co-operative may by special resolution
exempt a co-operative from the operation of subsection (2) in
5 relation to a particular financial year, either unconditionally or
on conditions.
(4) The amount paid for a share when it is repurchased may be an
amount decided by the board that is less than the nominal value
of the share but only --
10 (a) if the records of the co-operative disclose that the
amount paid is the net shareholder's equity per share in
the undertaking of the co-operative; or
(b) in accordance with the rules of the co-operative.
(5) This section does not apply if the member has resigned or has
15 been expelled from the co-operative or the member's
membership has been otherwise cancelled.
168. Deposit, debentures or co-operative capital units instead of
payment when share repurchased
(1) If a co-operative repurchases a share of a member, the
20 co-operative may instead of paying the purchase price to the
member --
(a) in the case of a deposit-taking co-operative, apply the
amount as an interest bearing deposit by the member
with the co-operative; or
25 (b) allot or issue debentures or co-operative capital units of
the co-operative to the member in satisfaction of the
amount.
(2) Subsection (1) applies only if --
(a) the board considers that payment of the repurchase price
30 would adversely affect the financial position of the
co-operative; or
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Part 7 Shares
Division 6 Repurchase of shares
s. 168
(b) the board and the member so agree.
(3) The deposit, debenture or co-operative capital unit bears interest
during any period --
(a) in the case of a co-operative with share capital --
5 (i) at the rate (or, if there is more than one rate, at
the higher or highest rate) of dividend payable
for that period on the share capital of the
co-operative; or
(ii) if the rate of dividend payable for that period has
10 not been decided, at the rate (or the higher or
highest rate) payable for the immediately
preceding period for which a rate has been
decided; or
(iii) if a rate of dividend has never been decided for
15 the share capital of the co-operative, at the rate
that the board of the co-operative considers
reasonable;
or
(b) in the case of a co-operative without share capital, at the
20 rate that the board of the co-operative considers
reasonable; or
(c) if the rules provide for a rate to be payable that is higher
than the rate applicable under paragraph (a) or (b), at the
higher rate.
25 (4) The deposit, debenture or co-operative capital unit must be
repaid to the member or redeemed, as the case may be, as soon
as repayment or redemption would not, in the opinion of the
board, adversely affect the financial position of the
co-operative.
30 (5) The deposit, debenture or co-operative capital unit must in any
case be repaid or redeemed within 10 years (or within any
shorter period that the rules of the co-operative require) after the
repurchase of the shares concerned.
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Shares Part 7
Repurchase of shares Division 6
s. 169
169. Cancellation of shares
A co-operative must cancel any share purchased by or forfeited
to the co-operative in accordance with this Act or the rules of
the co-operative.
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Co-operatives Bill 2006
Part 8 Voting and meetings
Division 1 Voting entitlements
s. 170
Part 8 -- Voting and meetings
Division 1 -- Voting entitlements
170. Application of Part to voting
The provisions of this Part applying to voting apply to voting on
5 all resolutions.
171. Voting
(1) The right to vote attaches to membership and not shareholding.
(2) Except as provided in subsections (3) and (4), each member has
only one vote at a meeting of the co-operative.
10 (3) If its rules so provide, a member of a co-operative group may
have the number of votes up to 5 at a general meeting that is
specified in the rules.
(4) If the rules so provide, the chairman has a second vote at a
board meeting or general meeting.
15 (5) In the case of joint membership --
(a) the joint members have only one vote between them;
and
(b) that vote may be exercised, subject to the grant of a
proxy or power of attorney, only by the joint member
20 determined in accordance with the rules.
172. Voting by proxy
(1) If the rules so provide, voting may be by proxy at a general
meeting.
(2) The instrument of proxy may state the way in which a proxy is
25 to vote on a particular resolution.
(3) The proxy must vote in the way authorised by an instrument of
proxy referred to in subsection (2).
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Voting and meetings Part 8
Voting entitlements Division 1
s. 173
(4) The rules of a co-operative may limit the number of persons for
which a person may act as a proxy on the same question.
(5) A person cannot exercise more than one proxy vote during a
vote on the same question unless the vote is conducted by poll
5 demanded under section 199.
173. Inactive members not entitled to vote and transitional
provision
(1) A member cannot vote if the member is not an active member
of the co-operative.
10 (2) Subsection (1) does not apply in relation to a transferred
co-operative during the 3 year period beginning on the transfer
day.
174. Control of the right to vote
(1) A person must not directly or indirectly control the exercise of
15 the right to vote of a member.
Penalty: a fine of $12 000.
(2) If a person controls the exercise of the right to vote of a member
at a meeting of a co-operative --
(a) the vote of the member is invalid; and
20 (b) if the person is a member, the vote of the person is
invalid.
(3) Nothing in this section prevents the exercise of a vote by means
of a proxy or power of attorney.
175. Effect of disposal of shares on voting rights
25 A member of a co-operative cannot vote if the member has sold
or transferred, or disposed of the beneficial interest in, the
member's shares, or has agreed to do so.
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Co-operatives Bill 2006
Part 8 Voting and meetings
Division 1 Voting entitlements
s. 176
176. Effect of relevant share and voting interests on voting rights
(1) A member of a co-operative cannot vote if another person,
whether or not a member of the co-operative, has a relevant
interest in any share held by the member or in the right to vote
5 of the member.
(2) A member who cannot vote because of this section may apply to
the Registrar to review the matter.
(3) The Registrar may order that the member may vote if the
Registrar is satisfied in the circumstances of the case that loss of
10 the right to vote would be unjust or unreasonable, and the order
of the Registrar has effect accordingly.
177. Rights of representatives
A person appointed under this Act to represent a member of a
co-operative --
15 (a) is entitled to receive notice of all meetings in the same
way as the member represented; and
(b) is entitled to exercise the same rights to vote as the
member represented; and
(c) is eligible to be elected to the board of the co-operative
20 if the member represented holds the qualifications
required for holding office as a director.
178. Other rights and duties of members not affected by
ineligibility to vote
A provision of this Act that disentitles a member of a
25 co-operative to vote, either generally or in relation to a
particular matter, does not affect any other right, entitlement,
obligation or duty of the member as a member.
179. Vote of disentitled member to be disregarded
Any vote cast by or on behalf of a member of a co-operative
30 when not entitled to vote must be disregarded.
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Co-operatives Bill 2006
Voting and meetings Part 8
Resolutions Division 2
s. 180
Division 2 -- Resolutions
180. Decisions to be by ordinary resolution
Unless this Act or the rules of the co-operative provide
otherwise, every question for decision by a co-operative must be
5 decided by ordinary resolution.
181. Ordinary resolutions
An ordinary resolution is a resolution of a co-operative that is
passed by a simple majority at a general meeting of the
co-operative or in a postal ballot of members.
10 182. Special resolutions
(1) A special resolution is a resolution of a co-operative that is
passed --
(a) by a two-thirds majority at a general meeting of
members; or
15 (b) by a two-thirds majority in a postal ballot, other than a
special postal ballot, of members; or
(c) by a three-quarters majority in a special postal ballot of
members.
(2) A special resolution may be passed by a postal ballot only if the
20 rules of the co-operative allow, or this Act requires, the special
resolution to be passed by postal ballot, including a special
postal ballot.
(3) A resolution is not taken to have been passed as a special
resolution unless not less than 21 days notice has been given to
25 the members of the co-operative stating --
(a) the intention to propose the special resolution; and
(b) the reasons for proposing the special resolution; and
(c) the effect of the special resolution being passed.
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Part 8 Voting and meetings
Division 2 Resolutions
s. 183
183. How majority obtained is ascertained
(1) A resolution is passed by a particular majority at a meeting if
that majority of the members of the co-operative who, being
entitled to do so, vote in person or, if proxies are allowed, by
5 proxy at the meeting vote in favour of the resolution.
(2) A resolution is passed by a particular majority in a postal ballot
if that majority of the members of the co-operative who, being
entitled to do so, cast formal votes in the postal ballot vote in
favour of the resolution.
10 184. Declaration of passing of special resolution
(1) At a meeting of a co-operative for the purpose of passing a
special resolution, a declaration by the chairman of the meeting
that the resolution has been passed as a special resolution is
evidence of that fact.
15 (2) A declaration by the returning officer for a postal ballot to pass
a special resolution that the resolution has been passed as a
special resolution is evidence of that fact.
(3) Subsection (1) does not apply if a poll is taken at the meeting of
the co-operative.
20 185. Effect of special resolution
(1) Subject to subsection (2), a special resolution has effect from
the date that it is passed.
(2) A special resolution relating to anything for which a special
resolution is required to be passed by special postal ballot has
25 no effect until it is registered under section 187(1).
186. Lodgment of special resolution
(1) A co-operative must lodge 2 copies of each special resolution
passed by the co-operative with the Registrar in accordance with
this section for registration.
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Voting and meetings Part 8
Resolutions Division 2
s. 187
(2) The copies must --
(a) be lodged within 28 days after the passing of a special
resolution or a longer period allowed by the Registrar;
and
5 (b) be signed by a director and the secretary of the
co-operative; and
(c) be accompanied by the lodgment fee prescribed by the
regulations.
(3) A co-operative and an officer of the co-operative must not
10 knowingly fail to lodge the required copies under this section.
Penalty: a fine of $2 000.
(4) This section and section 187 do not apply to a special resolution
altering the rules of a co-operative.
187. Decision of Registrar on application to register special
15 resolution
(1) If the Registrar is satisfied that the co-operative has complied
with this Act, and that a special resolution is not contrary to this
Act, the Registrar must register the special resolution.
(2) If the Registrar considers that the effect of a special resolution
20 lodged for registration would be in contravention of this Act or
any other law, the Registrar --
(a) may refuse to register the special resolution; and
(b) must give written notice to the co-operative that the
special resolution --
25 (i) in the case of a special resolution referred to in
section 185(2), has no effect; and
(ii) in any other case, has no effect as from the date
that it was passed.
(3) A certificate of registration of a special resolution given by the
30 Registrar is, in favour of any person advancing money to the
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Co-operatives Bill 2006
Part 8 Voting and meetings
Division 3 Resolution by circulated document
s. 188
co-operative on the faith of the certificate or in favour of any
guarantor of that advance, evidence that the resolution was
properly passed.
Division 3 -- Resolution by circulated document
5 188. Application of Division 3
(1) Subject to subsection (2), this Division applies to a resolution of
a co-operative, including a resolution appointing an officer or
auditor or approving of or agreeing to any act, matter or thing,
if --
10 (a) the co-operative has fewer than 50 members; and
(b) the resolution is required or permitted under this Act or
the rules of the co-operative to be passed at a general
meeting of the co-operative.
(2) This Division does not apply to a resolution of a co-operative --
15 (a) of which more than 14 days notice is required to be
given under this Act; or
(b) that is required to be passed by a majority other than a
simple majority.
189. Resolution by circulation of document -- fewer than
20 50 members
(1) If all the members of a co-operative have signed a document
that sets out the terms of a resolution and contains a statement
that they are in favour of the resolution, the resolution is taken
to have been passed at a general meeting of the co-operative.
25 (2) The meeting is taken to have been held --
(a) if all the members signed the document on the one day,
on that day and at the time the document was signed by
the last member to sign; or
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Voting and meetings Part 8
Postal ballots Division 4
s. 190
(b) if the members signed the document on different days,
on the day, and at the time, the document was signed by
the last member to sign.
(3) The document need not exist as a single document, but may
5 exist in the form of 2 or more documents in identical terms.
(4) The document is taken to constitute a minute of the general
meeting.
(5) Anything attached to the document and signed by the members
signing the document is taken to have been laid before the
10 co-operative at the general meeting.
(6) The document is signed by all members of a co-operative only if
the document is signed by each person who was a member of
the co-operative at the time the document was signed by the last
member to sign.
15 (7) Nothing in this section affects or limits any rule of law about the
effectiveness of the assent of a member of a co-operative given
to a document, or to an act, matter or thing, otherwise than at a
general meeting of the co-operative.
Division 4 -- Postal ballots
20 190. Postal ballots
(1) A postal ballot may be held as provided by the rules of a
co-operative and must be conducted in accordance with the
regulations.
(2) On the declaration by the returning officer of the result of the
25 ballot, the secretary of the co-operative must make an entry in
the minute book of the co-operative showing --
(a) the number of formal votes cast in favour of the
proposal concerned; and
(b) the number of formal votes cast against the proposal;
30 and
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Part 8 Voting and meetings
Division 4 Postal ballots
s. 191
(c) the number of informal votes cast.
191. Special postal ballots
(1) A special postal ballot is a postal ballot that is conducted as
required by this section.
5 (2) The ballot must not be held less than 21 days after notice of the
ballot is given to members so as to enable sufficient time for a
meeting to discuss the proposal that is the subject of the ballot
to be convened and held (whether by the board or on the
requisition of members).
10 (3) The co-operative must send to each member, along with any
other material required to be sent in connection with the postal
ballot, a disclosure statement approved by the Registrar and
containing information about --
(a) the financial position of the co-operative; and
15 (b) the interests of the directors of the co-operative in the
proposal with which the ballot is concerned, including
any interests of the directors in another organisation
concerned in the proposal; and
(c) any compensation or consideration to be paid to officers
20 or members of the co-operative in connection with the
proposal; and
(d) any other matters as the Registrar directs.
(4) If required by the Registrar, the disclosure statement is to be
accompanied by a report, made by an independent person
25 approved by the Registrar, about any matters that the Registrar
directs.
(5) Sections 16 (except subsection (3)) and 29 apply to the approval
of a disclosure statement under this section with any necessary
changes and in particular as if any reference in section 16 to a
30 formation meeting were a reference to the notice of the special
postal ballot.
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Voting and meetings Part 8
Postal ballots Division 4
s. 192
192. When a special postal ballot required
In addition to any requirement of this Act, the rules of a
co-operative must require a special postal ballot to be conducted
for the purpose of passing a special resolution in relation to any
5 of the following matters relating to the co-operative --
(a) conversion of --
(i) a share capital co-operative to a non-share capital
co-operative or vice versa; or
(ii) a trading co-operative to a non-trading
10 co-operative or vice versa;
(b) transfer of incorporation;
(c) an acquisition or disposal of assets referred to in
section 278;
(d) the maximum permissible level of share interest in the
15 co-operative;
(e) takeover;
(f) merger;
(g) transfer of engagements;
(h) members' voluntary winding up.
20 193. Holding of postal ballot on requisition and transitional
provision
(1) The board of a co-operative must conduct a postal ballot,
including a special postal ballot, for the passing of a special
resolution on the written requisition of such number of members
25 who together are able to cast at least 20%, or any lesser
percentage specified in the rules of the co-operative, of the total
number of votes able to be cast at a meeting of the co-operative.
(2) Subject to subsection (3), a member is not entitled to be a
requisitioning member unless the member is an active member.
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Part 8 Voting and meetings
Division 4 Postal ballots
s. 194
(3) Subsection (2) does not apply in relation to a transferred
co-operative during the 3 year period beginning on the transfer
day.
(4) The following provisions apply to a requisition for a postal
5 ballot --
(a) it must state --
(i) the proposed special resolution to be voted on;
and
(ii) the reasons for the making of the special
10 resolution; and
(iii) the effect of the special resolution being passed;
(b) it must be signed by the requisitioning members, and
may consist of several documents in like form each
signed by one or more of the requisitioning members;
15 (c) it must be served on the co-operative by being lodged at
the registered office of the co-operative.
(5) The postal ballot must be conducted as soon as practicable and
in any case must be conducted within 2 months after the
requisition is served.
20 (6) If the special resolution for which the requisitioned postal ballot
is conducted is not passed, the co-operative may recover the
expenses of the postal ballot from the members who
requisitioned the postal ballot as a debt due to the co-operative.
194. Expenses involved in postal ballots on requisition
25 (1) All reasonable expenses incurred by a co-operative in and in
connection with preparing for and holding a special postal ballot
are to be considered to constitute the "expenses of the postal
ballot" for the purposes of section 193(6).
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Voting and meetings Part 8
Meetings Division 5
s. 195
(2) Those expenses include (but are not limited to) the following
expenses --
(a) the cost of obtaining expert advice, including legal and
financial advice, and of commissioning expert reports;
5 (b) costs attributable to the use of staff of the co-operative
in connection with preparing for and holding the ballot;
(c) the cost of producing, printing and posting the ballot
papers and other material associated with the ballot.
Division 5 -- Meetings
10 195. Annual general meetings
(1) In the case of a co-operative registered under Part 2 Division 4,
the first annual general meeting of the co-operative must be held
within 18 months after registration under this Act.
(2) In the case of a co-operative registered under Part 2 Division 5,
15 the first annual general meeting of the co-operative must be held
within 18 months after the last annual general meeting held by
that co-operative before it was registered under this Act.
(3) The second or any later annual general meeting of a
co-operative must be held within --
20 (a) 5 months after the close of the financial year of the
co-operative; or
(b) a further time that may be allowed by the Registrar or is
prescribed by the regulations.
196. Special general meetings
25 A special general meeting of a co-operative may be called at
any time by the board of the co-operative.
197. Notice of meetings
The board must give each member at least 14 days notice of
each general meeting.
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Part 8 Voting and meetings
Division 5 Meetings
s. 198
198. Quorum at meetings
(1) The quorum for a meeting of a co-operative must be specified in
the rules.
(2) An item of business must not be transacted at a meeting of a
5 co-operative unless a quorum of members entitled to vote is
present during the transaction of that item.
199. Decision at meetings
(1) Unless subsection (4) requires it to be determined by a poll, a
question for decision at a general meeting is to be determined by
10 a show of hands.
(2) A proxy may exercise only one vote on a question determined
by a show of hands.
(3) A proxy may exercise more than one vote on a question
determined by a poll.
15 (4) A question is to be determined by a poll if --
(a) 5 members, present in person at the meeting or
represented at the meeting by a proxy, demand the poll;
or
(b) the chairman directs that the question will be determined
20 by poll.
(5) In the case of an equality of votes, whether on a show of hands
or on a poll, the chairman of the meeting at which the show of
hands takes place or at which the poll is demanded may exercise
a second or casting vote if the rules so provide.
25 200. Calling of general meeting on requisition and transitional
provision
(1) The board of a co-operative must convene a general meeting of
the co-operative on the written requisition of such number of
members who together are able to cast at least 20% (or any
30 lesser percentage specified in the rules of the co-operative) of
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Voting and meetings Part 8
Meetings Division 5
s. 200
the total number of votes able to be cast at a meeting of the
co-operative.
(2) Unless subsection (3) applies, a member is not entitled to be a
requisitioning member unless the member is an active member.
5 (3) Subsection (2) does not apply in relation to a transferred
co-operative during the 3 year period beginning on the transfer
day.
(4) The following provisions apply to a requisition for a general
meeting --
10 (a) it must state the objects of the meeting;
(b) it must be signed by the requisitioning members, and
may consist of several documents in like form each
signed by one or more of the requisitioning members;
(c) it must be served on the co-operative by being lodged at
15 the registered office of the co-operative.
(5) The meeting must be called and held as soon as practicable and
in any case must be held within 2 months after the requisition is
served.
(6) If the board does not call a meeting within 21 days after a
20 requisition is served, the following provisions apply --
(a) the requisitioning members, or any of them representing
at least half their total voting rights, may call the
meeting in the same way as nearly as possible as
meetings are called by the board;
25 (b) for that purpose they may request the co-operative to
supply a written statement setting out the names and
addresses of the persons entitled when the requisition
was served to receive notice of general meetings of the
co-operative;
30 (c) the board must send the requested statement to the
requisitioning members within 7 days after the request
for the statement is made;
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Part 8 Voting and meetings
Division 5 Meetings
s. 201
(d) the meeting called by the requisitioning members must
be held not later than 3 months after the requisition is
served;
(e) any reasonable expenses incurred by the requisitioning
5 members because of the board's failure to call the
meeting must be paid by the co-operative;
(f) any amount required to be paid by the co-operative
under paragraph (e) must be retained by the co-operative
out of any money due from the co-operative by way of
10 fees or other remuneration in respect of their services to
such of the directors as were in default.
201. Minutes
(1) Minutes of --
(a) each general meeting; and
15 (b) each meeting of the board; and
(c) each meeting of a committee to which the board's
functions have been delegated under section 209(1),
must be entered in the appropriate records within 28 days after
the meeting and confirmed at, and signed by the chairman of,
20 the next meeting.
(2) The minutes of each general meeting must be available for
inspection by members.
(3) The rules may provide that the minutes of board meetings and
committee meetings be available for inspection by members.
25 (4) Minutes must be kept in the English language.
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Management and administration of co-operatives Part 9
The Board Division 1
s. 202
Part 9 -- Management and administration
of co-operatives
Division 1 -- The Board
202. Board of directors
5 (1) Subject to this Act and the rules of the co-operative, the
business of a co-operative is to be managed by a board of
directors.
(2) The board of directors may exercise all the powers of the
co-operative that are not, by this Act or the rules of the
10 co-operative, required to be exercised by the co-operative in a
general meeting.
(3) The acts of a director are valid despite any defect that may
afterwards be discovered in his or her appointment or
qualification.
15 203. Election of directors
(1) Except as provided in subsections (2), (3) and (4), the directors
of a co-operative are to be elected in the manner specified in the
rules of the co-operative.
(2) The first directors of --
20 (a) a co-operative formed under this Act are to be elected at
its formation meeting; and
(b) a co-operative that was a corporation incorporated under
another Act are to be the directors in office at the date of
registration under this Act.
25 (3) If authorised by the rules of the co-operative, a board of
directors may appoint a person to fill a casual vacancy in the
office of a director until the next annual general meeting.
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Part 9 Management and administration of co-operatives
Division 1 The Board
s. 204
(4) A resolution passed at a general meeting of a co-operative
electing 2 or more directors is void unless --
(a) the meeting previously resolved that the nominations for
election could be voted on together; and
5 (b) no votes were cast against that previous resolution.
(5) Subsection (4) does not affect --
(a) a resolution to appoint directors by an amendment to the
co-operative's rules; or
(b) a ballot or poll to elect 2 or more directors if the ballot
10 or poll does not require members voting for one
candidate to vote for another candidate.
(6) For the purposes of subsection (5), a ballot or poll does not
require a member to vote for a candidate merely because the
member is required to express a preference among individual
15 candidates in order to cast a valid vote.
(7) A nomination for election or appointment to the office of a
director must give details of the qualifications and experience of
the person nominated.
(8) Unless this Act or the rules of a co-operative provides
20 otherwise, a director is eligible for re-election at the end of his
or her term of office.
204. Qualification of directors
(1) In this section --
"member director" means a director who is a person qualified
25 to be a director under subsection (2)(a).
(2) A person is not qualified to be a director of a co-operative
unless the person is --
(a) a member of the co-operative or a representative of a
corporation that is a member of the co-operative; or
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Management and administration of co-operatives Part 9
The Board Division 1
s. 205
(b) an employee of the co-operative or a person qualified as
provided by the rules.
(3) The majority of directors must be member directors.
(4) Subsection (2) does not prevent the rules of a co-operative
5 requiring that a greater number of directors than a majority must
be member directors.
205. Disqualified persons
(1) A person must not act as a director or directly or indirectly take
part in or be concerned with the management of a co-operative
10 if the person --
(a) is the auditor of the co-operative or a partner, employee
or employer of the auditor; or
(b) has been convicted, whether before or after the
commencement of this section, within or outside this
15 State --
(i) on indictment of an offence relating to the
promotion, formation or management of a
corporation; or
(ii) of an offence involving fraud or dishonesty
20 punishable on conviction by imprisonment for
not less than 3 months; or
(iii) of an offence under the Corporations Act
section 184, 344, 590, 592, 670A or 728; or
(iv) of an offence under a provision of a previous law
25 of this State or of another State or Territory, with
which any of the provisions referred to in
subparagraph (iii) corresponds,
within 5 years after the conviction or, if sentenced to
imprisonment, after the person's release from prison,
30 except with the leave of the Supreme Court.
Penalty: a fine of $24 000 and imprisonment for 2 years.
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Part 9 Management and administration of co-operatives
Division 1 The Board
s. 205
(2) A person must not act as a director or directly or indirectly take
part in or be concerned with the management of a co-operative
if the person --
(a) has been convicted of an offence under this Act, within
5 5 years after the conviction, except with leave of the
Supreme Court; or
(b) is disqualified from managing corporations under the
Corporations Act Part 2D.6; or
(c) is an insolvent under administration, as defined in the
10 Corporations Act section 9.
Penalty: a fine of $24 000 and imprisonment for 2 years.
(3) In proceedings for an offence against subsection (1), a
certificate by an authority prescribed by the regulations stating
that a person was released from prison on a specified date, is
15 evidence that the person was released from prison on that date.
(4) A person who intends to apply for leave of the Supreme Court
must give the Registrar at least 21 days notice of the person's
intention.
(5) The Supreme Court may grant leave subject to any condition or
20 limitation it considers appropriate.
(6) A person must comply with any condition or limitation subject
to which leave is granted.
Penalty: a fine of $24 000 and imprisonment for 2 years.
(7) On the application of the Registrar the Supreme Court may
25 revoke its leave.
(8) Subject to this section, a co-operative is declared to be an
applied Corporations legislation matter for the purposes of the
Corporations (Ancillary Provisions) Act 2001 Part 3 in relation
to the provisions of the Corporations Act Part 2D.6, subject to
30 the following modifications --
(a) a reference in the provisions to a corporation is to be
read as a reference to a co-operative;
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Management and administration of co-operatives Part 9
The Board Division 1
s. 206
(b) a reference in the provisions to a company is to be read
as a reference to a co-operative;
(c) a reference in the provisions to ASIC is to read as a
reference to the Registrar;
5 (d) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
206. Meeting of the board of directors
(1) In this section --
10 "member director" has the meaning given to that term in
section 204(1);
"independent director" means a director who is an employee
of the co-operative or a person qualified as provided by the
rules.
15 (2) Meetings of the board of directors must be held at least once
every 3 months and may be held as often as may be necessary.
(3) A meeting of the board of directors may be called by a director
giving notice individually to every other director.
(4) The board of directors may hold meetings, or allow directors to
20 take part in its meetings by telephone, video link, or another
form of communication that allows reasonably
contemporaneous and continuous communication between the
directors taking part in the meeting.
(5) A quorum of a meeting of the board of directors is 50% of the
25 number of directors or a greater number of directors specified in
the rules of the co-operative.
(6) For a quorum, the member directors must outnumber the
independent directors by at least one, or, if a greater number is
stated in the rules of the co-operative, the greater number.
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Part 9 Management and administration of co-operatives
Division 1 The Board
s. 207
(7) The chairman of the board may be elected either by the board or
at a general meeting of the co-operative, and is to be elected,
hold office, and retire, and may be removed from office, as
provided by the rules of the co-operative.
5 207. Transaction of business outside meetings
(1) The board of a co-operative may, if it considers appropriate,
transact any of its business by the circulation of papers among
all of the directors of the board.
(2) A resolution in writing approved in writing by a majority of the
10 directors of the board is taken to be a decision of the board.
(3) Separate copies of a resolution of the board may be signed by
the directors if the wording of the resolution and approval is
identical in each copy.
(4) For the purpose of approving a resolution under this section, the
15 chairman of the board and each director have the same voting
rights as they have at an ordinary meeting of the board.
(5) The resolution is approved when the last director required for
the majority signs.
(6) A resolution of a board must be recorded in the minutes of the
20 meetings of the board within 28 days after the resolution is
approved.
(7) Papers may be circulated among directors of the board for the
purposes of this section by facsimile or other transmission of the
information in the papers concerned.
25 208. Deputy directors
The rules of a co-operative may provide for a deputy director to
be appointed to act in the place of a director who is absent from
a meeting of the board.
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Management and administration of co-operatives Part 9
The Board Division 1
s. 209
209. Delegation by board
(1) If authorised by the rules of a co-operative, the board of the
co-operative may, by resolution, delegate the board's powers,
other than this power of delegation, specified in the resolution
5 to --
(a) a director; or
(b) a committee of 2 or more directors; or
(c) a committee of members of the co-operative; or
(d) a committee of members of the co-operative and other
10 persons if members form the majority of persons on the
committee.
(2) The co-operative or the board may, by resolution, revoke wholly
or in part a delegation under this section.
(3) A function, the exercise of which has been delegated under this
15 section, may be exercised from time to time in accordance with
the terms of the delegation while the delegation remains
unrevoked.
(4) A delegation under this section may be made subject to
conditions or limitations as to the exercise of any of the
20 functions delegated, or as to time or circumstance.
(5) Despite any delegation under this section, the board may
continue to exercise all or any of the functions delegated.
210. Removal from and vacation of office
(1) The directors hold office and must retire, and may be removed
25 from office, as provided by the rules of the co-operative.
(2) A director vacates office in the circumstances, if any, provided
in the rules of the co-operative and in any of the following
cases --
(a) if the director is disqualified from being a director as
30 provided by section 205;
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Part 9 Management and administration of co-operatives
Division 2 Secretary
s. 211
(b) if the director absents himself or herself from
3 consecutive ordinary meetings of the board without its
leave;
(c) if the director resigns the office of director by written
5 notice given by the director to the co-operative;
(d) if the director is removed from office by special
resolution of the co-operative;
(e) if the person ceases to hold the qualification by reason
of which the person was qualified to be a director;
10 (f) if an administrator of the co-operative's affairs is
appointed under Part 12 Division 5.
Division 2 -- Secretary
211. Secretary
(1) A co-operative must have a secretary.
15 (2) The board of the co-operative is to appoint the secretary.
(3) The board may appoint a person to act as the secretary during
the absence or incapacity of the secretary.
(4) A person is not qualified to be appointed as, or to act as, the
secretary unless the person is an adult who ordinarily lives in
20 Australia.
Division 3 -- Duties and liabilities of directors, officers
and employees
212. Meaning of "officer"
In this Division --
25 "officer" of a co-operative means --
(a) a director or secretary of the co-operative; or
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Management and administration of co-operatives Part 9
Duties and liabilities of directors, officers and employees Division 3
s. 213
(b) a person who is concerned, or takes part, in the
management of the co-operative, whether or not as a
director; or
(c) a receiver, or receiver and manager, of property of
5 the co-operative, or another authorised person who
enters into possession or assumes control of property
of the co-operative for the purpose of enforcing a
charge; or
(d) an administrator of a deed of arrangement executed
10 by the co-operative; or
(e) a liquidator or provisional liquidator appointed in a
voluntary winding up of the co-operative; or
(f) an administrator of the co-operative appointed under
the Corporations Act Part 5.3A as applying under
15 this Act; or
(g) a trustee or other person administering a compromise
or arrangement made between the co-operative and
another person or other persons.
213. Officers must act honestly
20 An officer of a co-operative must at all times act honestly in the
exercise of his or her powers and the discharge of the duties of
his or her office, both in the State and elsewhere.
Penalty:
(a) for a contravention committed with intent to deceive
25 or defraud the co-operative, members or creditors of
the co-operative or creditors of another person or for
another fraudulent purpose, a fine of $24 000 and
imprisonment for 2 years; or
(b) in another case, a fine of $6 000.
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Part 9 Management and administration of co-operatives
Division 3 Duties and liabilities of directors, officers and employees
s. 214
214. Standard of care and diligence required
(1) In the exercise of his or her powers and the discharge of his or
her functions, an officer of a co-operative must exercise the
degree of care and diligence that a reasonable person in a like
5 position in a co-operative would exercise in the co-operative's
circumstances.
Penalty: a fine of $2 000.
(2) An officer is not liable to be convicted for a contravention of
this section if the co-operative has resolved by ordinary
10 resolution to forgive the contravention.
215. Improper use of information or position
(1) An officer or employee or former officer or employee of a
co-operative or a member of a committee referred to in
section 209(1) must not make improper use of information
15 acquired by reason of his or her position as an officer or
employee or member to gain, directly or indirectly, an
advantage for himself or herself or for any other person or to
cause detriment to the co-operative.
(2) An officer or employee of a co-operative or a member of a
20 committee referred to in section 209(1) must not make improper
use of his or her position as an officer or employee or member,
to gain, directly or indirectly, an advantage for himself or
herself or for any other person or to cause detriment to the
co-operative.
25 Penalty:
(a) for a contravention committed with intent to deceive
or defraud the co-operative, members or creditors of
the co-operative or creditors of another person or for
another fraudulent purpose, a fine of $24 000 and
30 imprisonment for 2 years; or
(b) in any other case, a penalty not exceeding a fine of
$6 000.
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Management and administration of co-operatives Part 9
Duties and liabilities of directors, officers and employees Division 3
s. 216
216. Recovery of damages by co-operative
(1) If a person contravenes a provision of this Division in relation to
a co-operative, the co-operative may, whether or not the person
has been convicted of an offence for that contravention, recover
5 an amount from the person as a debt payable to the
co-operative.
(2) The amount that the co-operative is entitled to recover from the
person is --
(a) if the person or another person made a profit as a result
10 of the contravention, an amount equal to that profit; and
(b) if the co-operative has suffered loss or damage as a
result of the contravention, an amount equal to that loss
or damage.
217. Other duties and liabilities not affected
15 This Division has effect in addition to, and does not limit, a law
relating to the duty or liability of a person because of the
person's office or employment in relation to a co-operative and
does not prevent the institution of any civil proceeding for a
breach of a duty or for a liability of that type.
20 218. Application of Corporations Act concerning indemnities and
insurance for officers and auditors
A co-operative is declared to be an applied Corporations
legislation matter for the purposes of the Corporations
(Ancillary Provisions) Act 2001 Part 3 in relation to the
25 Corporations Act sections 199A, (except 199A(2)(b)), 199B
and 199C, subject to the following modifications --
(a) a reference in the sections to a company is to be read as
a reference to a co-operative;
(b) a reference in the sections to ASIC is to be read as a
30 reference to the Registrar;
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Part 9 Management and administration of co-operatives
Division 4 Restrictions on directors and officers
s. 219
(c) a reference to section 182 is to be read as a reference to
sections 213 and 214 of this Act;
(d) a reference to section 183 is to be read as a reference to
section 215 of this Act;
5 (e) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
219. Application of Corporations Act provisions concerning
officers of co-operatives
10 A co-operative is declared to be an applied Corporations
legislation matter for the purposes of the Corporations
(Ancillary Provisions) Act 2001 Part 3 in relation to the
Corporations Act sections 344, 589 to 598 and 1307, subject to
the following modifications --
15 (a) in section 344, "a company, registered scheme or
disclosing entity" is to be read as "a co-operative";
(b) a reference in the sections, other than section 344, to a
company is to be read as a reference to a co-operative;
(c) a reference in the sections to ASIC is to be read as a
20 reference to the Registrar;
(d) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
Division 4 -- Restrictions on directors and officers
25 220. Directors' remuneration
A director of a co-operative must not receive remuneration for
services as a director other than fees, concessions and other
benefits that are approved at a general meeting of the
co-operative.
30 Penalty: a fine of $24 000 or imprisonment for 2 years.
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Management and administration of co-operatives Part 9
Restrictions on directors and officers Division 4
s. 221
221. Certain financial accommodation to officers prohibited
(1) An officer of a co-operative who is not a director of the
co-operative must not obtain financial accommodation from the
co-operative other than --
5 (a) with the approval of a majority of the directors; or
(b) under a scheme about providing financial
accommodation to officers that has been approved by a
majority of the directors.
Penalty: a fine of $24 000 or imprisonment for 2 years.
10 (2) For the purposes of this section, financial accommodation is
taken to be obtained by an officer of a co-operative if it is
obtained by --
(a) a proprietary company in which the officer is a
shareholder or director; or
15 (b) a trust of which the officer is a trustee or beneficiary; or
(c) a trust of which a corporation is trustee if the officer is a
director or other officer of the corporation.
(3) A co-operative must not give financial accommodation to an
officer of the co-operative if --
20 (a) by giving the financial accommodation, the officer
would contravene this section; and
(b) the co-operative knows or should reasonably know of
the contravention.
Penalty: a fine of $50 000.
25 222. Financial accommodation to directors and associates
(1) In this section --
"associate" of a director means --
(a) the director's spouse; or
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Part 9 Management and administration of co-operatives
Division 4 Restrictions on directors and officers
s. 222
(b) a person when acting in the capacity of trustee of a
trust under which --
(i) the director or director's spouse has a
beneficial interest; or
5 (ii) a corporation mentioned in paragraph (c) has
a beneficial interest;
or
(c) a corporation if --
(i) the director or director's spouse has a material
10 interest in shares in the corporation; and
(ii) the nominal value of the shares is not less than
10% of the nominal value of the issued share
capital of the corporation.
(2) For the purposes of this section, a person has a "material
15 interest" in a share in a corporation if --
(a) the person has power to withdraw the share capital
subscribed for the share or to exercise control over the
withdrawal of the share capital; or
(b) the person has power to dispose of or to exercise control
20 over the disposal of the share; or
(c) the person has power to exercise or to control the
exercise of any right to vote conferred on the holder of
the share.
(3) A co-operative must not provide financial accommodation to a
25 director, or to a person the co-operative knows or should
reasonably know is an associate of a director, unless --
(a) the accommodation is --
(i) approved under subsection (4); or
(ii) given under a scheme approved under
30 subsection (4); or
(iii) provided on terms no more favourable to the
director or associate than the terms on which it is
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Management and administration of co-operatives Part 9
Restrictions on directors and officers Division 4
s. 222
reasonable to expect the co-operative would give
if dealing with the director or associate at arm's
length in the same circumstances;
and
5 (b) the directors have approved the accommodation, at a
meeting of the board at which a quorum was present, by
a majority of at least two-thirds of the directors present
and voting on the matter.
Penalty: a fine of $50 000.
10 (4) For the purposes of subsection (3)(a)(i) and (ii), financial
accommodation or a scheme is approved if --
(a) it is approved by a resolution passed at a general
meeting; and
(b) the full details of the accommodation or scheme were
15 made available to members at least 21 days before the
meeting.
(5) A director or an associate of a director must not obtain financial
accommodation given in contravention of subsection (3).
Penalty: a fine of $24 000 or imprisonment for 2 years.
20 (6) For the purposes of this section, a concessional rate of interest
for a borrower from a co-operative is a normal term only if the
borrower is entitled to the concession by being a member of a
class of borrowers from the co-operative specified in its rules as
being entitled to the concession.
25 (7) If a director of a co-operative or an associate of a director
accepts in payment of a debt owed by a member of the
co-operative to the director or associate, any proceeds of
financial accommodation provided to the member by the
co-operative, this section has effect as if the financial
30 accommodation has been provided to the director or associate.
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Part 9 Management and administration of co-operatives
Division 4 Restrictions on directors and officers
s. 223
(8) In this section, a reference to --
(a) the provision of financial accommodation to a director
or an associate of a director; or
(b) the obtaining of financial accommodation by a director
5 or an associate of a director; or
(c) a debt owed to a director or an associate of a director,
includes a reference to a provision of financial accommodation
to, or an obtaining of financial accommodation by, the director
or associate, or a debt owed to the director or associate, jointly
10 with another person.
223. Restriction on directors of certain co-operatives selling land
to co-operative
A director of a co-operative the primary activity of which is or
includes the acquisition of land in order to settle or retain people
15 on the land, must not sell land to the co-operative except under a
special resolution of the co-operative.
Penalty: a fine of $24 000 or imprisonment for 2 years.
224. Management contracts
(1) In this section --
20 "management contract" means a contract or other
arrangement under which --
(a) a person who is not an officer of the co-operative
agrees to perform the whole, or a substantial part, of
the functions of the co-operative, whether under the
25 control of the co-operative or not; or
(b) a co-operative agrees to perform the whole or a
substantial part of its functions --
(i) in a particular way; or
(ii) in accordance with the directions of any
30 person; or
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Management and administration of co-operatives Part 9
Declaration of interests Division 5
s. 225
(iii) subject to specified restrictions or conditions.
(2) A co-operative must not enter into a management contract
unless that contract has first been approved by special
resolution.
5 (3) A management contract entered into in contravention of
subsection (2) is void.
Division 5 -- Declaration of interests
225. Declaration of interest
(1) A director of a co-operative who is or becomes in any way
10 (whether directly or indirectly) interested in a contract, or
proposed contract with the co-operative must declare the nature
and extent of the interest to the board of directors under this
section.
Penalty: a fine of $24 000 and imprisonment for 2 years.
15 (2) In the case of a proposed contract, the declaration must be
made --
(a) at the meeting of the board at which the question of
entering into the contract is first considered; or
(b) if the director was not at that time interested in the
20 proposed contract, at the next meeting of the board held
after the director becomes interested in the proposed
contract.
(3) If a director becomes interested in a contract with the
co-operative after it is made, the declaration must be made
25 at the next meeting of the board held after the director
becomes interested in the contract.
(4) For the purposes of this section, a general written notice given
to the board by a director to the effect that the director --
(a) is a member of a specified entity; and
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Part 9 Management and administration of co-operatives
Division 5 Declaration of interests
s. 225
(b) is to be regarded as interested in any contract that may,
after the giving of the notice, be made with the entity,
is a sufficient declaration.
(5) A director of a co-operative who holds an office or has an
5 interest in property whereby, whether directly or indirectly,
duties or interests might be created that could conflict with the
director's duties or interests as director must, under
subsection (6), declare at a meeting of the board of directors the
fact and the nature, character and extent of the conflict.
10 Penalty: a fine of $24 000 and imprisonment for 2 years.
(6) A declaration required by subsection (5) in relation to holding
an office or having an interest must be made by a person --
(a) if the person holds the office or has the interest when he
or she becomes a director, at the first meeting of the
15 board held after --
(i) the person becomes a director; or
(ii) the relevant facts as to holding the office or
having the interest come to the person's
knowledge,
20 whichever is the later; or
(b) if the person starts to hold the office or acquires the
interest after the person becomes a director, at the first
meeting of the board held after the relevant facts as to
holding the office or having the interest come to the
25 person's knowledge.
(7) If a director has made a declaration under this section, then
unless the board determines otherwise, the director must not --
(a) be present during any deliberation of the board in
relation to the matter; or
30 (b) take part in any decision of the board in relation to the
matter.
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(8) For the purposes of the making of a determination of the board
under subsection (7) in relation to a director who has made a
declaration under this section, the director must not --
(a) be present during any deliberation of the board for the
5 purpose of making the determination; or
(b) take part in the making by the board of the
determination.
226. Declarations to be recorded in minutes
Every declaration under this Division is to be recorded in the
10 minutes of the meeting at which it was made.
227. Division does not affect other laws or rules
Except as provided in section 228, this Division is in addition
to, and does not limit, the operation of a law or a provision in
the rules of the co-operative restricting a director from having
15 an interest in contracts with the co-operative or from holding
offices or possessing properties involving duties or interests in
conflict with his or her duties or interests as director.
228. Certain interests need not be declared
The interest in a contract or proposed contract that a director is
20 required by this Division to declare does not include an interest
in --
(a) a contract or proposed contract for a purchase of goods
and services by the director from the co-operative; or
(b) a lease of land to the director by the co-operative; or
25 (c) a contract or proposed contract for the sale of
agricultural products or livestock by the director to the
co-operative; or
(d) a contract or proposed contract that, under the rules of
the co-operative, may be made between the co-operative
30 and a member; or
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Division 6 Financial reports and audit
s. 229
(e) a contract or proposed contract of a class of contracts
prescribed by the regulations,
but only if the contract is made in good faith, in the ordinary
course of the business of the co-operative, and on the terms that
5 are usual and proper in similar dealings between the
co-operative and its members.
Division 6 -- Financial reports and audit
229. Meaning of "control" and "entity"
In this Division --
10 "control" has the same meaning in relation to a co-operative
that it has under the Corporations Act in relation to a
corporation;
"entity" has the same meaning in relation to a co-operative that
it has under the Corporations Act in relation to a
15 corporation.
230. Requirements for financial records and financial reports
(1) A co-operative is declared to be an applied Corporations
legislation matter for the purposes of the Corporations
(Ancillary Provisions) Act 2001 Part 3 in relation to the
20 provisions of the Corporations Act Part 2F.3, sections 249K and
249V and Chapter 2M, subject to the following
modifications --
(a) a reference in the provisions to a company or to a public
company is to be read as a reference to a co-operative;
25 (b) a reference in the provisions to the Court is to be read as
a reference to the Supreme Court;
(c) a reference in the provisions to "prescribed" is to be read
as a reference to "approved by the Registrar";
(d) a reference in the provisions to ASIC is to be read as a
30 reference to the Registrar;
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(e) an offence created in relation to the provisions is the
offence set out in subsection (2);
(f) any penalty for the offence referred to in paragraph (e) is
the penalty set out in subsection (2);
5 (g) a reference in sections 247A and 300(14) and (15) to the
Corporations Act section 237 is to be read as a reference
to section 92 of this Act;
(h) a reference in section 300(8) to the Corporations Act
section 199A(2) or (3) is to be read as a reference to
10 section 218 of this Act;
(i) the provisions apply as if sections 247D, 291, 292(2),
293, 294, 296(1) (second sentence), 298(3), 300(12) and
(13), 301(2), 315(2) to (4), 323D(1) and (2), 323DA,
325 and 327(1A) and Part 2M.1, Part 2M.4 Division 2,
15 Part 2M.5 and Part 2M.6 of the Corporations Act were
omitted;
(j) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
20 (2) A co-operative must --
(a) keep financial records and prepare financial reports as
required under this Act; and
(b) ensure that the financial reports are audited in
accordance with this Act.
25 Penalty: a fine of $2 000.
(3) Without limiting the matters for which regulations under this
section may make provision, the regulations may make
provision for or in relation to the following --
(a) requiring the submission of financial reports to the
30 Australian Accounting Standards Board;
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Division 6 Financial reports and audit
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(b) requiring the adoption by a co-operative of the same
financial year for each entity that the co-operative
controls.
231. Power of Registrar to grant exemptions
5 The Registrar may, by order published in the Gazette,
exempt --
(a) a co-operative; or
(b) a person or firm proposed to be appointed as an auditor
of a co-operative; or
10 (c) a director or auditor of a co-operative,
from compliance with a provision of a regulation made for the
purpose of this Part or with a provision of the Corporations Act
as that Act applies under section 230.
232. Disclosure by directors
15 The directors of a co-operative must make the disclosures about
the affairs of the co-operative and of any entity that the
co-operative controls that are required by the regulations.
Penalty: a fine of $2 000.
233. Protection of auditors etc.
20 (1) An auditor of a co-operative has qualified privilege in relation
to --
(a) a statement that the auditor makes, orally or in writing,
in the course of his or her duties as auditor; or
(b) the giving of notice, or the sending of copies of financial
25 reports or other reports, to the Registrar under this Act.
(2) A person has qualified privilege in relation to --
(a) the publishing of a document prepared by an auditor in
the course of the auditor's duties and required by or
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s. 234
under this Act to be lodged with the Registrar, whether
or not the document has been lodged; or
(b) the publishing of a statement made by an auditor
referred to in subsection (1).
5 (3) This section does not limit or affect a right, privilege or
immunity that an auditor or other person has, apart from this
section, as defendant in proceedings for defamation.
234. Financial year
(1) The financial year of a co-operative is to end on the day in each
10 year that is provided for by the rules of the co-operative.
(2) In the case of a co-operative registered under Part 2 Division 4,
the first financial year of the co-operative may extend from the
date of its registration to a date not more than 18 months after
registration.
15 (3) In the case of a co-operative registered under Part 2 Division 5,
the first financial year of the co-operative is to be a period not
extending beyond a date that is 18 months after the end of the
co-operative's last financial year before the co-operative
registered under this Act.
20 (4) On an alteration of the rules of a co-operative altering its
financial year, the alteration may provide either that the
financial year current at the date of alteration is to be extended
for a period not exceeding 6 months or that the financial year
next following the financial year that is so current is to be a
25 period exceeding 12 months but not exceeding 18 months.
Division 7 -- Registers, records and returns
235. Registers to be kept by co-operatives
(1) A co-operative must keep the following registers in accordance
with this section --
30 (a) a register of members, directors and shares, if any;
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s. 236
(b) a register of loans to, securities given by, debentures and
co-operative capital units issued by and deposits
received by the co-operative;
(c) a register of names of persons who have given loans or
5 deposits to, or who hold securities given by, or who hold
debentures or co-operative capital units issued by the
co-operative;
(d) a register of loans made by or guaranteed by the
co-operative, and of any securities taken by the
10 co-operative;
(e) a register of holders of co-operative capital units, in
accordance with section 262(4);
(f) a co-operative register of charges, in accordance with
Schedule 3 clause 41;
15 (g) a register of memberships cancelled under Part 6, in
accordance with section 133;
(h) a register of notifiable interests, in accordance with
section 289;
(i) a register of undertakings, in accordance with
20 section 477(1);
(j) other registers prescribed by the regulations.
Penalty: a fine of $2 000.
(2) The registers must be kept in the way, and contain the
particulars, specified by this Act or prescribed by the
25 regulations.
236. Location of registers
(1) A register kept under this Division must be kept at --
(a) the co-operative's registered office; or
(b) an office at the co-operative's principal place of
30 business; or
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(c) an office, whether of the co-operative or of someone
else, where the work involved in maintaining the
register is done; or
(d) another office approved by the Registrar.
5 (2) The office must be in this State.
(3) The co-operative must lodge with the Registrar a notice of the
address at which the register is kept within 28 days after the
register is --
(a) established at an office that is not the co-operative's
10 registered office; or
(b) moved from one office to another.
237. Inspection of registers etc.
(1) A co-operative must have at the office where the registers are
kept and available during all reasonable hours for inspection by
15 a member free of charge the following --
(a) a copy of this Act and the regulations;
(b) a copy of the rules of the co-operative and any order
under section 350;
(c) a copy of the minutes of each general meeting of the
20 co-operative;
(d) a copy of the last annual report of the co-operative under
section 240;
(e) the register of directors, members and shares;
(f) the register of names of persons who have given loans or
25 deposits to or hold securities, debentures or co-operative
capital units given or issued by the co-operative;
(g) other registers prescribed by the regulations.
(2) If a register is not kept on a computer, the person inspects the
register itself.
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Division 7 Registers, records and returns
s. 238
(3) If the register is kept on a computer, the person inspects a hard
copy of the information on the register unless the person and the
co-operative agree that the person can access the information by
computer.
5 (4) A member is entitled to make a copy of entries in a register
specified in subsection (1) and to do so free of charge unless the
rules of the co-operative require a fee to be paid, in which case
on payment of the required fee.
(5) The fee required by the rules must not be more than the fee
10 prescribed for a copy of any entry in the register.
(6) A co-operative must --
(a) permit a member to inspect a document or make a copy
of a document that the member is entitled to inspect or
make under this section; and
15 (b) give the member all reasonable assistance to inspect the
document or make the copy.
Penalty: a fine of $2 000.
(7) A co-operative must have at the place where the registers are
kept and available during all reasonable hours for inspection by
20 any person such documents in relation to the co-operative as are
prescribed.
Penalty: a fine of $2 000.
238. Use of information on registers
(1) A person must not --
25 (a) use information about a person obtained from a register
kept under this Division to contact or send material to
the person; or
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Registers, records and returns Division 7
s. 239
(b) disclose information of that kind knowing that the
information is likely to be used to contact or send
material to the person,
unless that use or disclosure of the information is --
5 (c) relevant to the holding of the directorship, membership,
shares, loans, securities, debentures, co-operative capital
units or deposits concerned or the exercise of the rights
attaching to them; or
(d) approved by the board; or
10 (e) necessary to comply with a requirement of this Act.
(2) A person who contravenes subsection (1) is liable to
compensate anyone else who suffers loss or damage because of
the contravention.
(3) A person who makes a profit from a contravention of
15 subsection (1) owes a debt to the co-operative.
(4) The amount of the debt is the amount of the profit.
239. Notice of appointment etc. of directors and officers
(1) A co-operative must give notice to the Registrar in accordance
with this section of the appointment of a person as a director,
20 principal executive officer or secretary of the co-operative or a
subsidiary of the co-operative, and of the cessation of the
appointment.
(2) The notice must --
(a) be in the form approved by the Registrar; and
25 (b) be given within 28 days after the appointment or
cessation of appointment; and
(c) state the particulars, prescribed by the regulations, of the
appointment or cessation of appointment.
Penalty: a fine of $2 000.
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Division 7 Registers, records and returns
s. 240
240. Annual report to be lodged with Registrar
(1) For the purposes of subsection (2) the required period is --
(a) 28 days after the annual general meeting of the
co-operative; or
5 (b) if the annual general meeting of the co-operative is not
held within the period stated in section 195(3)(a),
28 days after the end of that period.
(2) A co-operative must lodge with the Registrar, within the
required period in each year, an annual report containing the
10 following --
(a) a notice in the form approved by the Registrar listing the
secretary, the directors and the principal executive
officers of the co-operative and of each subsidiary of the
co-operative, as at the date that the annual report is
15 lodged with the Registrar;
(b) if the co-operative is required under section 230 to
prepare a financial report for its most recently ended
financial year, a copy of the financial report;
(c) a copy of the financial statements of each subsidiary of
20 the co-operative in relation to the most recently ended
financial year of the subsidiary, or a copy of the
consolidated financial statements for all subsidiaries of
the co-operative in relation to the most recently ended
financial year of the subsidiaries;
25 (d) a copy of any report by the auditors or directors of the
co-operative or subsidiary --
(i) prepared under section 230(2); or
(ii) on a financial report referred to in paragraph (b)
or a financial statement referred to in
30 paragraph (c);
(e) other particulars prescribed by the regulations.
Penalty: a fine of $2 000.
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Name and registered office Division 8
s. 241
241. List of members to be provided at request of Registrar
A co-operative must, at the written request of the Registrar,
send to the Registrar, within the time and in the way that the
Registrar specifies, a full list of the members of the co-operative
5 and of each subsidiary of the co-operative, together with the
particulars with regard to those members that the Registrar
specifies in the request.
Penalty: a fine of $2 000.
242. Special return to be given at request of Registrar
10 (1) The Registrar may, by direction in writing, require a
co-operative to give to the Registrar a special return in the form,
within the time, and relating to the subject matter, specified by
the Registrar.
(2) The co-operative must comply with a direction under
15 subsection (1).
Penalty: a fine of $2 000.
Division 8 -- Name and registered office
243. Name to include certain matter
(1) The name of a co-operative may consist of words, numbers or a
20 combination of both.
(2) The name of a co-operative must include the word
"Co-operative" or "Cooperative" or the abbreviation "Co-op".
(3) The word "Limited" or the abbreviation "Ltd" must be the last
word of the name.
25 (4) A corporation that is formed or incorporated under an Act other
than this Act must not register under the other Act by a name
that includes the word "Co-operative" or "Cooperative" or the
abbreviation "Co-op".
Penalty: a fine of $2 000.
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Division 8 Name and registered office
s. 244
(5) The Registrar must not register as the name of a co-operative a
name that contains anything a regulation declares is an
unsuitable name, unless the Minister is satisfied the name is
suitable for registration in the circumstances of a particular case.
5 (6) Subsection (4) does not apply to a corporation that is allowed
under another Act to use the word "Co-operative" or
"Cooperative" or the abbreviation "Co-op" in its name.
244. Use of abbreviations
A description of a co-operative is not inadequate or incorrect
10 merely because of one or more of the following --
(a) the use of the abbreviation "Co-op" instead of the word
"Co-operative" or "Cooperative" in the co-operative's
name;
(b) the use of the abbreviation "Ltd" instead of the word
15 "Limited" in the co-operative's name;
(c) the use of the symbol "&" instead of the word "and" in
the co-operative's name;
(d) the use of any of those words instead of the
corresponding abbreviation or symbol in the
20 co-operative's name;
(e) the use of any abbreviation or elaboration of the name of
the co-operative that is approved in a particular case or
for a particular purpose by the Registrar in writing.
245. Name to appear on business documents etc.
25 (1) A co-operative must ensure its name appears in legible
characters on its seal, and in any of the following documents
issued, signed or endorsed by or on behalf of the
co-operative --
(a) a bill of exchange, promissory note, cheque or other
30 negotiable instrument;
(b) a receipt or letter of credit issued by the co-operative;
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Name and registered office Division 8
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(c) a document of a class prescribed by the regulations.
Penalty: a fine of $2 000.
(2) An officer of a co-operative or a person on its behalf must
not --
5 (a) use a seal of the co-operative; or
(b) sign or authorise to be signed on behalf of the
co-operative any document referred to in subsection (1),
in or on which the co-operative's name does not appear in
legible characters.
10 Penalty: a fine of $2 000.
(3) A director of a co-operative who knowingly authorises or
permits a contravention of this section is guilty of an offence.
Penalty: a fine of $2 000.
246. Change of name of co-operative
15 (1) A co-operative may by special resolution change its name to a
name approved by the Registrar.
(2) A change of name must be advertised as prescribed by the
regulations.
(3) A change of name does not take effect until --
20 (a) the Registrar has noted the change on the certificate of
registration of the co-operative; or
(b) the certificate of registration is surrendered to the
Registrar and a replacement certificate of registration is
issued in the new name.
25 (4) A change of name by a co-operative does not affect --
(a) the identity of the co-operative; or
(b) the exercise of a right, or the enforcement of an
obligation, by or against the co-operative or a person; or
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(c) the continuation of legal proceedings by or against the
co-operative.
(5) Legal proceedings that might have been continued or started by
or against the co-operative in its former name may be continued
5 or started by or against the co-operative in its new name.
(6) The Registrar may refuse to approve a change of name if the
Registrar thinks the new name is unsuitable.
(7) The Registrar may direct a co-operative to change its name if
the Registrar considers the name is likely to be confused with
10 the name of a corporation or a registered business name.
247. Restriction on use of word "co-operative" or similar words
(1) A person other than a co-operative must not trade, or carry on
business, under a name or title containing the word
"Co-operative" or "Cooperative" or the abbreviation "Co-op" or
15 words importing a similar meaning.
Penalty: a fine of $2 000.
(2) Subsection (1) does not apply to a corporation referred to in
section 243(6).
248. Registered office of co-operative
20 (1) A co-operative must have a registered office.
Penalty: a fine of $2 000.
(2) A co-operative must, at the premises of its registered office,
publicly and conspicuously display a notice stating the name of
the co-operative and identifying the premises as its registered
25 office.
Penalty: a fine of $2 000.
(3) Within 28 days after changing the address of its registered
office, a co-operative must give the Registrar written notice of
the new address.
30 Penalty: a fine of $2 000.
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Power to raise money Division 1
s. 249
Part 10 -- Funds and property
Division 1 -- Power to raise money
249. Meaning of obtaining financial accommodation
A reference in this Division to the obtaining of financial
5 accommodation includes a reference to the obtaining of credit
and the borrowing or raising of money by any means.
250. Fund raising to be in accordance with Act and regulations
The regulations may impose requirements and restrictions on
the obtaining of financial accommodation, and the giving of
10 security in order to obtain financial accommodation, by a
co-operative.
251. Limits on deposit taking
A co-operative must not accept money on deposit unless --
(a) the co-operative is authorised by its rules to accept
15 money on deposit and was authorised by its rules
immediately before the commencement of this section to
accept money on deposit; or
(b) the co-operative was a deposit-taking corporation
immediately before it became a co-operative and it is
20 authorised by its rules to accept money on deposit; or
(c) in the case of a merged co-operative, one or more of the
co-operatives involved in the merger was a
deposit-taking co-operative immediately before the
registration of the merged co-operative and the merged
25 co-operative is authorised by its rules to accept money
on deposit.
252. Members etc. not required to see to application of money
A member or other person from whom a co-operative obtains
financial accommodation is not required to see to its application
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Division 1 Power to raise money
s. 253
and is not affected or prejudiced by the fact that in obtaining
that financial accommodation, the co-operative contravened a
provision of this Act or the rules of the co-operative.
253. Registrar's directions about fundraising
5 (1) The Registrar may, if the Registrar considers it is in the interests
of a co-operative's members, by written notice served on a
co-operative, give a direction to the co-operative as to the way
in which it is to exercise its functions in connection with the
activities of the co-operative in obtaining financial
10 accommodation.
(2) A direction under subsection (1) may make provision for any
one or more of the following matters --
(a) requiring the co-operative to stop obtaining financial
accommodation or to stop obtaining financial
15 accommodation in a particular way;
(b) requiring the co-operative to repay in accordance with
the direction all or part of financial accommodation
obtained;
(c) requiring the co-operative to re-finance in a specified
20 way financial accommodation repaid in accordance with
the Registrar's direction;
(d) the way in which the co-operative is permitted to invest
or use the proceeds of financial accommodation it
obtains.
25 (3) Within 28 days of receiving a direction, a co-operative may
apply to the Supreme Court for a review of that decision.
254. Subordinated debt
(1) In this section --
"subordinated debt" means debt incurred under an agreement
30 under which, in the event of the winding up of the
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Power to raise money Division 1
s. 255
co-operative, a claim of the creditor against the
co-operative in relation to the debt is to rank in priority --
(a) equally with the claim of another creditor who is a
party to a similar agreement; and
5 (b) except as provided by paragraph (a), after the claims
of another creditor of the co-operative and before the
claims of members to repayment of share capital in
the co-operative.
(2) A co-operative may incur subordinated debt.
10 (3) An agreement under which subordinated debt is incurred has
effect despite the provisions of the Corporations Act Part 5.6
Division 6, as applied under Part 12 Division 3 of this Act.
255. Application of Corporations Act to issues of debentures
(1) Subject to subsection (2), the debentures of a co-operative are
15 declared to be applied Corporations legislation matters for the
purposes of the Corporations (Ancillary Provisions) Act 2001
Part 3 in relation to the provisions of Part 1.2A, Chapter 2L,
Chapter 6CA, Chapter 6D and Part 7.10 of the Corporations
Act, subject to the following modifications --
20 (a) the provisions apply as if a co-operative were a
company;
(b) a reference in the provisions to a corporation includes a
reference to a co-operative;
(c) a reference in the provisions to ASIC is to be read as a
25 reference to the Registrar;
(d) any other changes, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
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Division 1 Power to raise money
s. 256
(2) The provisions of the Corporations Act applying to the
debentures of a co-operative by this section do not apply to the
following --
(a) a loan to which section 260 applies;
5 (b) an issue of debentures of a co-operative that is made --
(i) solely to members; or
(ii) solely to members and employees of the
co-operative; or
(iii) to a person who on becoming an inactive
10 member of the co-operative has had his or her
share capital converted to debt.
(3) Words used in this section that are not defined in this Act have
the same meanings as in the Corporations Act.
256. Application of Corporations to particular issues of
15 debentures
An issue of debentures to which section 257 applies is declared
to be an applied Corporations legislation matter for the
Corporations (Ancillary Provisions) Act 2001 Part 3 in relation
to the Corporations Act, sections 722 and 734, subject to the
20 following modifications --
(a) the provisions apply as if a co-operative were a
company;
(b) a reference in the provisions to a disclosure document is
to be read as a reference to a disclosure statement under
25 section 257;
(c) a reference in the provisions to securities is to be read as
a reference to debentures;
(d) a reference in the provisions to ASIC is to be read as a
reference to the Registrar;
30 (e) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3 that
are prescribed under the regulations.
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Co-operatives Bill 2006
Funds and property Part 10
Power to raise money Division 1
s. 257
257. Disclosure statement
(1) This section applies to the issue of debentures of a co-operative
if the issue is made --
(a) solely to members; or
5 (b) solely to members and employees of the co-operative.
(2) Before issuing to a person debentures to which this section
applies, a co-operative must give the person a disclosure
statement, approved by the Registrar, and containing the
information that is reasonably necessary to enable a person to
10 make an informed assessment of the financial prospects of the
co-operative, including --
(a) the purpose for which the money raised by the
co-operative by the issue of debentures is to be used;
and
15 (b) the rights and liabilities attaching to the debentures; and
(c) the financial position of the co-operative; and
(d) the interests of the directors of the co-operative in the
issue of the debentures; and
(e) compensation or consideration to be paid to officers or
20 members of the co-operative in connection with the
issue of debentures; and
(f) other matters that the Registrar directs.
(3) Sections 16 (except subsection (3)) and 29 apply to the approval
of a disclosure statement under this section with any necessary
25 changes and, in particular, as if a reference in section 16 to a
formation meeting were a reference to the issue of debentures.
258. Approval of board for transfer of debentures
A debenture of a co-operative cannot be sold or transferred
except with the consent of the board and in accordance with the
30 rules of the co-operative.
page 153
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 10 Funds and property
Division 1 Power to raise money
s. 259
259. Application of Corporations Act -- reissue of redeemed
debentures
Debentures issued by a co-operative to any of its members or
employees are declared to be applied Corporations legislation
5 matters for the purposes of the Corporations (Ancillary
Provisions) Act 2001 Part 3 in relation to the Corporations Act
section 124(1)(b) or 563AAA as if a co-operative were a
company.
260. Compulsory loan by member to co-operative
10 (1) If authorised by the rules of the co-operative, the co-operative
may require its members to lend money, with or without
security, to the co-operative, in accordance with a proposal
approved by special resolution of the co-operative.
(2) The proposal must not require a loan to be for a term of more
15 than 7 years or another term prescribed by the regulations.
(3) The proposal must --
(a) be accompanied by a disclosure statement, approved by
the Registrar, that explains the purpose for which the
money raised by the co-operative under the proposal is
20 to be used, and includes any other information that the
Registrar directs; and
(b) show the total amount of the loan to be raised by the
co-operative and the basis on which the money required
to be lent by each member is to be calculated; and
25 (c) be accompanied by a statement informing the member
that the member may inform the board by notice on or
before the date specified in the statement, being a date
before the passing of the special resolution, that the
member resigns on the passing of the special resolution.
30 (4) If the proposal allows, the board of the co-operative may, under
the terms of the proposal, deduct the money required to be lent
by a member to the co-operative from money payable from the
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[Draft Bill for public comment]
Co-operatives Bill 2006
Funds and property Part 10
Power to raise money Division 1
s. 261
co-operative to the member for his or her dealings with the
co-operative.
(5) A proposal to deduct money referred to in subsection (4) must,
in addition to meeting the requirements of subsection (3),
5 show --
(a) the basis on which the money is to be deducted; and
(b) the time and way of making the deductions.
(6) When approved the proposal is binding on --
(a) all members of the co-operative at the date of passing of
10 the special resolution, other than a member who has
given a notice of resignation in accordance with
subsection (3)(c); and
(b) all persons who become members of the co-operative
after that date and before the total amount of the loan to
15 be raised under the proposal has been raised.
(7) Sections 16 (except subsection (3)) and 29 apply to the approval
of a disclosure statement under this section with any necessary
changes and in particular as if a reference in section 16 to a
formation meeting were a reference to the special resolution.
20 261. Interest payable on compulsory loan
(1) The rate of interest payable by a co-operative on a loan under
section 260 during a period is --
(a) in the case of a co-operative with share capital --
(i) the rate (or if there is more than one rate, the
25 higher or highest rate) of dividend payable for
the period on the share capital of the
co-operative; or
(ii) if the rate of dividend payable for the period has
not been determined, the rate (or the higher or
30 highest rate) of dividend payable for the
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[Draft Bill for public comment]
Co-operatives Bill 2006
Part 10 Funds and property
Division 2 Co-operative capital units
s. 262
immediately preceding period for which a rate
has been determined; or
(iii) if a rate of dividend has never been determined
for the share capital of the co-operative, the rate
5 that the board of the co-operative considers
reasonable;
or
(b) in the case of a co-operative without share capital, the
rate that the board of the co-operative considers
10 reasonable; or
(c) if the rules provide for a rate to be payable that is higher
than the rate applicable under paragraph (a) or (b), that
higher rate.
(2) A member may agree to the rate of interest being less than the
15 rate that would otherwise be payable under this section and may
agree to no interest being paid.
Division 2 -- Co-operative capital units
262. General nature of co-operative capital units
(1) A co-operative capital unit ("CCU") is an interest issued by a
20 co-operative conferring an interest in the capital, but not the
share capital, of the co-operative.
(2) A CCU --
(a) is personal property; and
(b) is transferable or transmissible as provided by this Act
25 and the rules of the co-operative, subject to the terms of
issue of the CCU; and
(c) is, subject to the rules of the co-operative, capable of
devolution by will or by operation of law.
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Funds and property Part 10
Co-operative capital units Division 2
s. 263
(3) Subject to subsection (2) --
(a) the laws applicable to ownership of and dealing with
personal property apply to a CCU as they apply to other
property; and
5 (b) equitable interests in respect of a CCU may be created,
dealt with and enforced as in the case of other personal
property.
(4) A transferor of a CCU remains the holder of the CCU until the
transfer is registered and the name of the transferee, and the
10 details of the transferee's CCU holding, are entered in the
register of CCU holders referred to in section 235(1).
(5) Despite any rule of law or equity to the contrary, a condition
subject to which a CCU is issued is not invalid merely because
the CCU is, by the condition, made irredeemable or redeemable
15 only on the happening of a contingency however remote or at
the end of a period however long.
263. Priority of CCU's on winding up
(1) On a winding up of a co-operative, a debt owed to a person as
the holder or former holder of a CCU issued by the co-operative
20 is to rank for priority of payment in accordance with the terms
of issue of the CCU.
(2) Such a debt may rank as a secured debt if it is secured but if it is
unsecured may not rank in priority to other unsecured debts.
(3) It may rank equally with or behind unsecured debts and, if the
25 debt ranks behind unsecured debts, may rank in priority to,
equally with or behind debts due to contributories.
264. Financial accommodation provisions apply to issue of CCUs
(1) The issuing of CCUs is to be considered to be the obtaining of
financial accommodation and accordingly Part 10 Division 1
30 applies to the issue of CCUs.
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Part 10 Funds and property
Division 2 Co-operative capital units
s. 265
(2) For the purposes of that Division, a CCU is to be considered to
be a debenture.
265. CCUs to be issued to non-members
CCUs may be issued to a person whether or not the person is a
5 member of the co-operative.
266. Minimum requirements for rules concerning CCUs
The rules of a co-operative that permit the co-operative to issue
CCUs must contain provision to the effect of the following
provisions and must not contain provisions that are inconsistent
10 with the following provisions --
(a) each holder of a CCU is entitled to one vote only at a
meeting of the holders of CCUs;
(b) the rights of the holders of CCUs may be varied only in
the way and to the extent provided by their terms of
15 issue and only with the consent of at least 75% of the
holders of CCUs given in writing at a meeting;
(c) the holder of a CCU has, in the person's capacity as a
holder of a CCU, none of the rights or entitlements of a
member of the co-operative;
20 (d) the holder of a CCU is entitled to receive notice of all
meetings of the co-operative and all other documents in
the same manner as the holder of a debenture of the
co-operative.
267. CCUs not to be issued unless terms of issue approved by
25 Registrar
(1) A co-operative is not to issue CCUs unless --
(a) the terms of issue have been approved by a special
resolution of the co-operative; and
(b) the issue is made pursuant to an offer accompanied by a
30 copy of a statement approved by the Registrar under
subsection (3); and
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Co-operatives Bill 2006
Funds and property Part 10
Co-operative capital units Division 2
s. 268
(c) the Registrar approves of the terms of the issue under
subsection (4).
(2) The terms of issue must include, but is not limited to including,
the following information --
5 (a) details of entitlement to repayment of capital;
(b) details of entitlement to participate in surplus assets and
profits;
(c) details of entitlement to interest on capital, including
whether interest is cumulative or non-cumulative;
10 (d) details of how capital and interest on capital are to rank
for priority of payment on a winding up;
(e) whether there is a limit on the total holding of CCUs
that may be acquired by persons who are not members
of the co-operative and, if there is a limit, what the
15 limit is.
(3) The statement approved by the Registrar for the purposes of the
issue is to set out the terms of the issue, the rights of the holders
of CCUs, the terms of redemption and the manner of
transferability of CCUs.
20 (4) The Registrar is not to approve the terms of issue unless
satisfied that they will not result in a failure to comply with
co-operative principles and are not contrary to the rules of the
co-operative or this Act.
268. Directors' duties concerning CCUs
25 In discharging their duties, it is proper for the directors of a
co-operative to take into account that the holders of CCUs, in
their capacity as holders of CCUs, have none of the rights and
entitlements of, and are not entitled to be regarded as, members
of the co-operative.
page 159
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 10 Funds and property
Division 2 Co-operative capital units
s. 269
269. Redemption of CCUs
(1) The redemption of CCUs is not to be considered to be a
reduction in the share capital of the co-operative.
(2) A co-operative may redeem CCUs but only on the terms and in
5 the way that is provided by the terms of their issue and only if
they are fully paid up.
(3) CCUs may not be redeemed except out of --
(a) profits that would otherwise be available for dividends;
or
10 (b) the proceeds of a fresh issue of shares, or an approved
issue of CCUs, made for the purpose of the redemption.
(4) An issue of CCU's is an approved issue for the purposes of
subsection (3) if there is the same entitlement to priority of
payment of capital and dividend in relation to shares in the
15 co-operative as there was for the redeemed CCUs.
(5) Any premium payable on redemption is to be provided for out
of profits or out of the share premium account or an account
created for that purpose.
270. Capital redemption reserve
20 (1) This section applies if CCUs are redeemed out of profits that
would otherwise be available for dividends.
(2) Out of profits that would otherwise have been available for
dividends there is to be transferred to a reserve called the capital
redemption reserve a sum equal to the nominal amount of the
25 CCUs redeemed.
(3) The provisions of this Act relating to the reduction of share
capital of a co-operative apply as if the capital redemption
reserve were paid-up share capital of the co-operative.
page 160
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Funds and property Part 10
Charges Division 3
s. 271
(4) The capital redemption reserve may be applied in paying up
unissued shares of the co-operative to be issued to members of
the co-operative as fully-paid bonus shares.
271. Issue of shares in substitution for redemption
5 (1) If a co-operative has redeemed or is about to redeem CCUs held
by an active member of the co-operative, it may --
(a) issue shares to the member up to the sum of the nominal
value of the CCUs redeemed or to be redeemed, as if
those CCUs had never been issued; or
10 (b) pay up amounts unpaid on shares held by the member up
to the sum of the nominal value of the CCUs redeemed
or to be redeemed, as if those CCUs had never been
issued.
(2) This section applies only if the terms of issue of the CCUs
15 provide for the conversion of CCUs held by an active member
of the co-operative into shares of the co-operative.
Division 3 -- Charges
272. Registration of charges
Schedule 3 has effect but does not apply to --
20 (a) a mortgage, charge or encumbrance that is over specific
land and is registered under the Transfer of Land
Act 1893; or
(b) a mortgage, charge or encumbrance registered under the
Mining Act 1978.
25 Division 4 -- Receivers and other controllers of property
of co-operatives
273. Receivers and other controllers of property of co-operatives
Schedule 4 has effect.
page 161
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 10 Funds and property
Division 5 Disposal of surplus from activities
s. 274
Division 5 -- Disposal of surplus from activities
274. Retention of surplus for benefit of co-operative
The board of a co-operative may resolve to retain all or part of
the surplus arising in a year from the business of the
5 co-operative to be applied for the benefit of the co-operative.
275. Application for charitable purposes or members' purposes
(1) The rules of a co-operative may authorise the co-operative to
apply a part of the surplus arising in a year from the business of
the co-operative for a charitable purpose.
10 (2) The rules of a trading co-operative may authorise the
co-operative to apply a part of the surplus arising in a year from
the business of the co-operative towards supporting an activity
approved by the co-operative.
(3) The rules must limit the amount that may be applied under
15 subsection (1) or (2) to a specified proportion of the surplus.
(4) A co-operative may apply part of the surplus for a purpose and
to the extent authorised by rules under subsection (1) or (2).
276. Distribution of surplus or reserves to members
(1) In this section --
20 "limited dividend" means a dividend that is not more than the
amount prescribed by the regulations.
(2) The rules of a trading co-operative may authorise a co-operative
to apply a part of the surplus arising in any year from the
business of the co-operative or a part of the reserves of the
25 co-operative by --
(a) distribution to members as a rebate in proportion to the
value of business done by each member with the
co-operative or to profits earned by the co-operative on
business done by each member with the co-operative; or
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Funds and property Part 10
Disposal of surplus from activities Division 5
s. 277
(b) the issue of bonus shares to members in proportion to
the value of business done by each member with the
co-operative, to profits earned by the co-operative on
business done by each member with the co-operative or
5 to shares held by the member; or
(c) the issue to members of a limited dividend in proportion
to shares held by the member.
(3) The amount of a rebate or dividend payable to a member under
subsection (2)(a) or (c) may, with the consent of the member, be
10 applied --
(a) in payment for the issue to the member of bonus shares;
or
(b) as a loan to the co-operative.
277. Application of surplus to other persons
15 (1) If authorised by its rules, a part of the surplus arising in a year
from the business of a trading co-operative may be credited to a
person who is not a member, but is qualified to be a member, by
way of rebate in proportion to the value of business done by the
person with the co-operative or to the profit earned by the
20 co-operative on business done by the person with the
co-operative, if --
(a) the person was a member when the business was done
and the membership has lapsed; or
(b) the person has applied for membership since the
25 business was done.
(2) Nothing in this section precludes the payment of a bonus to an
employee in accordance with the terms of his or her
employment.
page 163
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 10 Funds and property
Division 6 Acquisition and disposal of assets
s. 278
Division 6 -- Acquisition and disposal of assets
278. Acquisition and disposal of assets
(1) In this section --
"undertaking", of a co-operative, means all the assets of the
5 co-operative.
(2) Unless otherwise provided by the rules, a co-operative must not
do any of the following things except as approved by special
resolution by means of a special postal ballot --
(a) sell, or lease as a going concern --
10 (i) the undertaking of the co-operative; or
(ii) a part of that undertaking that relates to its
primary activities and the value of which
represents the percentage prescribed by the
regulations or more of the total value of the
15 undertaking;
(b) acquire from or dispose of to a director or employee of
the co-operative, or a relative, within the meaning of the
Corporations Act, of a director or employee of the
co-operative or of the spouse of a director or employee
20 of the co-operative, property the value of which
represents the percentage prescribed by the regulations,
or more, of the total value of all the assets of the
co-operative that relate to its primary activities;
(c) acquire an asset the value of which represents the
25 percentage prescribed by the regulations, or more, of the
total value of the assets of the co-operative, if the
acquisition would result in the co-operative starting to
carry on an activity that is not one of its primary
activities;
30 (d) dispose of an asset, if the disposal would result in the
co-operative ceasing to carry on a primary activity of the
co-operative, or in the ability of the co-operative to carry
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Co-operatives Bill 2006
Funds and property Part 10
Acquisition and disposal of assets Division 6
s. 278
on a primary activity of the co-operative being
substantially impaired.
Penalty: a fine of $6 000.
(3) If a co-operative contravenes this section, each person who is a
5 member of the board of the co-operative is taken to have
committed an offence unless the person satisfies the court that
he or she used all due diligence to prevent the contravention by
the co-operative.
Penalty: a fine of $6 000.
10 (4) The Registrar may, by order published in the Gazette, exempt a
co-operative from compliance with a provision of this section
and section 191 in relation to any matter to which this section
applies.
page 165
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 1 Restrictions on share and voting interests
s. 279
Part 11 -- Restrictions on the acquisition of interests
in co-operatives
Division 1 -- Restrictions on share and voting interests
279. Application of Part
5 This Part applies to trading co-operatives.
280. Notice required to be given of voting interest
(1) A person, whether or not a member of the co-operative, must
give notice to a co-operative within 5 business days after
becoming aware that the person has a relevant interest in the
10 right to vote of a member of the co-operative.
Penalty: a fine of $2 000.
(2) A person, whether or not a member of the co-operative, who has
ceased to have a relevant interest in the right to vote of a
member of a co-operative must give notice to the co-operative
15 within 5 business days after becoming aware of the fact.
Penalty: a fine of $2 000.
(3) Section 176 provides for the effect of a person having a relevant
interest in the right to vote of a member of a co-operative.
281. Notice required to be given of substantial share interest
20 (1) A person must give notice to a co-operative within 5 business
days after becoming aware that the person has a substantial
share interest in the co-operative.
Penalty: a fine of $2 000.
(2) A person who has a substantial share interest in a co-operative
25 must give notice to the co-operative within 5 business days after
becoming aware that a substantial change has occurred in the
share interest.
Penalty: a fine of $2 000.
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Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on share and voting interests Division 1
s. 282
(3) A person who has ceased to have a substantial share interest in a
co-operative must give notice to the co-operative within
5 business days after becoming aware that the person has ceased
to have the interest.
5 Penalty: a fine of $2 000.
(4) A person has a "substantial share interest" in a co-operative if
the nominal value of the shares in the co-operative in which the
person has a relevant interest represents 5% or more of the
nominal value of the issued share capital of the co-operative.
10 (5) A "substantial change" takes place in a person's share interest
in a co-operative if there is an increase or decrease in the
number of shares in the co-operative in which the person has a
relevant interest and the increase or decrease represents at least
1% of the nominal value of the issued share capital of the
15 co-operative.
282. Requirements for notices
A notice required under this Division must --
(a) be in the form approved by the Registrar; and
(b) state the particulars, prescribed by the regulations, of the
20 interest or change being notified.
283. Maximum permissible level of share interest
(1) A person must not have a relevant interest in shares of a
co-operative the nominal value of which is more than 20% of
the nominal value of the issued share capital of the co-operative.
25 (2) The Registrar, by order published in the Gazette, may specify a
maximum greater than 20% as the maximum permissible level
of share interest for the purposes of subsection (1) for a
particular co-operative.
(3) Unless an order under subsection (2) is in force, a co-operative,
30 by its rules, may specify a maximum less than 20% as the
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[Draft Bill for public comment]
Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 1 Restrictions on share and voting interests
s. 284
maximum permissible level of share interest for the purposes of
subsection (1) for that co-operative.
(4) The maximum permissible level of share interest applying under
this section may be increased for a particular person by special
5 resolution of the co-operative concerned passed by a special
postal ballot.
(5) A resolution under subsection (4) does not have effect unless --
(a) it is approved by the Registrar; or
(b) the person concerned is another co-operative.
10 (6) The Registrar's approval of the resolution may be given on
conditions.
284. Transitional provision
(1) This section applies to a member of a transferred co-operative
whose relevant interest in the shares of that co-operative
15 immediately before the transfer day was more than the
maximum permissible level of share interest for the purposes of
section 283(1).
(2) The maximum permissible level of share interest for the
purposes of section 283(1) for the member is the level of the
20 member's relevant interest in the shares immediately before the
transfer day.
(3) In relation to a particular co-operative, this section ceases to
operate 6 months after the transfer day.
285. Shares to be forfeited to remedy contravention
25 (1) If a person has a relevant interest in a share of a co-operative in
contravention of this Division, the board of the co-operative
must declare to be forfeited enough of the shares in which the
person has a relevant interest to remedy the contravention.
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Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on share and voting interests Division 1
s. 286
(2) The shares to be forfeited are --
(a) the shares nominated by the person for the purpose; or
(b) in the absence of such a nomination, the shares in which
the person has had a relevant interest for the shortest
5 time.
(3) A declaration of the board that shares are forfeited operates to
forfeit the shares concerned.
(4) On forfeiture of the shares, section 300(1)(b) ceases to apply in
relation to the contravention.
10 (5) Sections 130 to 132 apply to shares forfeited under this section
as if the shares had been forfeited under Part 6.
286. Powers of board in response to suspected contravention
(1) If the board of a co-operative is satisfied on reasonable grounds
that a person has contravened section 283 in relation to the
15 co-operative, the board may do either or both of the
following --
(a) refuse to register a share transfer involving the person;
(b) suspend a stated right or entitlement that a person has as
a member of the co-operative or attaching to any shares
20 of the co-operative in which the person has a relevant
interest.
(2) The board may request a person who it suspects has a relevant
interest in shares of the co-operative to give specified
information to the board about the interest.
25 (3) A failure by a person to comply with a request under
subsection (2) is a reasonable ground for being satisfied that the
person has contravened section 283.
287. Powers of Supreme Court in relation to contravention
(1) If a person has contravened section 283 in relation to a
30 co-operative, the Supreme Court may, on the application of the
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[Draft Bill for public comment]
Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 1 Restrictions on share and voting interests
s. 288
co-operative or the Registrar, make any order it considers
appropriate.
(2) Without limiting subsection (1), an order may include --
(a) a remedial order; and
5 (b) for the purpose of securing compliance with any other
order made under this section, an order directing the
co-operative or any other person to do or refrain from
doing a specified act.
(3) An order may be made whether or not the contravention
10 continues.
(4) Proof to the satisfaction of the Supreme Court at the hearing of
an application that --
(a) a person has a relevant interest in a share of a
co-operative because an associate of the person has a
15 relevant interest in a share; and
(b) the associate became entitled to the relevant interest
within 6 months before the application was filed with
the Supreme Court,
is evidence that the associate was an associate of the person
20 from the time the person first had the relevant interest until the
date of the hearing.
288. Co-operative to notify Registrar of interest over 20%
(1) A co-operative must notify the Registrar in writing within
14 days after the board becomes aware that --
25 (a) a particular person has a relevant interest in shares of the
co-operative the nominal value of which is more than
20% of the nominal value of the issued share capital of
the co-operative; or
(b) there has been a change in the number of shares in
30 which that person holds a relevant interest.
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Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on share and voting interests Division 1
s. 289
(2) The notification must give details of the relevant interest
concerned or of the change concerned.
289. Co-operative to keep register
(1) A co-operative must keep a register of notifiable interests.
5 (2) The co-operative must enter in the register in alphabetical order
the names of persons from whom the co-operative has received
notice under this Division together with the information
contained in the notice.
(3) The register must be open for inspection --
10 (a) by a member in accordance with section 237; and
(b) by any other person on payment of the fee (if any) that
the co-operative may require, being not more than the
maximum fee prescribed by the regulations.
290. Unlisted companies to provide list of shareholders etc.
15 (1) This section applies to a company, within the meaning of the
Corporations Act, that is not a listed corporation, within the
meaning of that Act.
(2) A company to which this section applies that is a member of a
co-operative must give to the co-operative a list showing --
20 (a) the name of each member of the company as at the end
of the financial year of the company and the number of
shares in the company held by each member; and
(b) the name of each person who has a relevant interest,
within the meaning of the Corporations Act, in a share
25 of the company together with details of the interest; and
(c) the name of each person who is an associate, within the
meaning of the Corporations Act, of the company.
(3) A list under subsection (2) must be given within 28 days after a
written request for the list is made to the company by the
30 co-operative or the Registrar.
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Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 1 Restrictions on share and voting interests
s. 291
(4) The details to be shown on the list are the details as at the date
specified in the request.
(5) The Registrar may make a request under subsection (3) if the
Registrar is of the opinion that the company is or may be
5 involved in a suspected contravention of a provision of this
Division.
291. Excess share interest not to affect loan liability
(1) This section applies if a co-operative has made a loan to a
member and the member had or has a relevant interest in shares
10 of the co-operative in contravention of this Division.
(2) Until the amount lent to the member has been repaid to the
co-operative, with any interest payable, the member is liable to
make to the co-operative the payments that the member would
be liable to make if all the shares concerned were lawfully held
15 by the member.
(3) Security for the repayment of the loan is not affected by a
contravention of this Division.
292. Extent of operation of Division
This Division --
20 (a) applies to all natural persons, whether resident in this
State or in Australia or not and whether Australian
citizens or not, and to all bodies, whether incorporated
or not, and whether carrying on business in this State or
in Australia or not; and
25 (b) extends to acts done or omitted to be done outside this
State, whether in Australia or not.
293. Registrar may grant exemption from Division
The Registrar may, by order published in the Gazette, exempt a
person from the operation of this Division.
page 172
[Draft Bill for public comment]
Co-operatives Bill 2006
Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on certain share offers Division 2
s. 294
Division 2 -- Restrictions on certain share offers
294. Share offers to which Division applies
This Division applies to the following offers to purchase shares
in a co-operative --
5 (a) an offer made as part of a proposal for, or that is
conditional on, the sale of the undertaking or part of the
undertaking, as a going concern, of the co-operative;
(b) an offer made as part of a proposal for, or that is
conditional on, the registration of the co-operative as a
10 company under the Corporations Act;
(c) an offer made as part of a proposal for, or that is
conditional on, the winding up of the co-operative;
(d) an offer that would result in a contravention of
section 283 were the offeror to be registered,
15 immediately after the offer is made, as the holder of the
shares that are the subject of the offer.
295. Requirements to be satisfied before offer can be made
A person must not make an offer to which this Division applies
unless the making of the offer has been approved --
20 (a) by special resolution by means of a special postal ballot;
and
(b) by the Registrar.
296. Some offers totally prohibited if they discriminate
An offer referred to in section 294(a) to (d) must not
25 discriminate between members who are active members and
members who are not active members.
page 173
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 2 Restrictions on certain share offers
s. 297
297. Offers to be submitted to board first
(1) Any proposal to make an offer to which this Division applies
must in the first instance be submitted to the board of the
co-operative.
5 (2) The board may decline to put a proposed offer to a special
postal ballot unless arrangements satisfactory to the board have
been made for payment to the co-operative of the expenses
involved in holding the ballot.
(3) The board may require payment in advance under
10 subsection (2).
(4) A requisition for a special postal ballot for the purposes of this
Division cannot be served unless and until the board has had a
reasonable opportunity to consider the proposed offer
concerned.
15 (5) For the purposes of subsection (4), a period of 28 days is a
reasonable opportunity for considering a proposed offer but the
Registrar may extend that period in a particular case, whether
before or after the end of the 28 days, by written notice to the
co-operative.
20 298. Announcements of proposed takeovers concerning
proposed company
(1) This section applies to an offer to purchase shares in a
co-operative made as part of a proposal for, or that is
conditional on, the registration of the co-operative as a company
25 (the "proposed company") under the Corporations Act.
(2) A person must not make a public announcement to the effect
that the person proposes, or that the person and another person
or other persons together propose, to make takeover offers, or to
cause a takeover announcement to be made, in relation to the
30 proposed company if --
(a) the person knows that the announcement is false or is
recklessly indifferent as to whether it is true or false; or
page 174
[Draft Bill for public comment]
Co-operatives Bill 2006
Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on certain share offers Division 2
s. 298
(b) the person has no reasonable grounds for believing that
the person, or the person and the other person or
persons, will be able to perform obligations arising
under the scheme or announcement or under the
5 Corporations Act in relation to the scheme or
announcement if a substantial proportion of the offers or
the offers made under the announcement are accepted.
Penalty: a fine of $20 000 or imprisonment for 5 years.
(3) If a person makes a public announcement to the effect that the
10 person proposes, or that the person and another person or other
persons together propose, to make a takeover bid in relation to
the proposed company, the person must proceed to make a
takeover bid in relation to shares in the company in accordance
with the public announcement within 2 months after the day on
15 which the company is incorporated.
Penalty: a fine of $10 000 or imprisonment for 2 years.
(4) A person is not liable to be convicted of more than one offence
under subsection (3) for any one public announcement.
(5) A person who contravenes this section, whether or not the
20 person is convicted of an offence for the contravention, is liable
to pay compensation to a person who suffered loss as a result of
entering into a share transaction in reliance on the public
announcement concerned.
(6) The amount of that compensation is the difference between the
25 price of the shares at which the transaction was entered into and
the price of the shares at which the transaction would have been
likely to have been entered into if the person had not made the
public announcement.
(7) A person does not contravene subsection (3) and is not liable to
30 pay compensation for the contravention if it is proved that the
person could not reasonably have been expected to make the
takeover bid concerned --
(a) as a result of circumstances that existed when the public
announcement was made but of which the person had no
page 175
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 11 Restrictions on the acquisition of interests in co-operatives
Division 2 Restrictions on certain share offers
s. 299
knowledge and could not reasonably have been expected
to have knowledge; or
(b) as a result of a change in circumstances after the
announcement was made, other than a change in
5 circumstances caused directly or indirectly by the
person.
(8) Expressions used in this section have the same meanings as in
the Corporations Law section 746 as applying on
12 March 2000.
10 299. Additional disclosure requirements for offers involving
conversion to company
If an offer is part of a proposal for, or is conditional on, the
registration of the co-operative as a company under the
Corporations Act, the disclosure statement required to be sent to
15 members for the purposes of the special postal ballot relating to
the offer must contain the following additional information --
(a) full particulars of any proposal by which a director will
acquire a relevant interest in a share of the company to
be formed;
20 (b) other information that is material to the making of a
decision by a member whether or not to agree to the
making of the offer, being information that is within the
knowledge of the directors and has not previously been
disclosed to the members;
25 (c) other information that the Registrar directs.
300. Consequences of prohibited offer
(1) If a person makes an offer to purchase shares in a co-operative
in contravention of this Division --
(a) the person cannot be registered as the holder of the
30 shares concerned; and
page 176
[Draft Bill for public comment]
Co-operatives Bill 2006
Restrictions on the acquisition of interests in co-operatives Part 11
Restrictions on certain share offers Division 2
s. 301
(b) if the transfer of the shares is registered, the person
cannot vote at a meeting of, or in a postal ballot
conducted by, the co-operative.
(2) A vote cast by or for a member when the member cannot vote
5 because of this section must be disregarded.
301. Registrar may grant exemptions
The Registrar may, by order published in the Gazette, exempt a
person or co-operative from compliance with a provision of this
Division and section 191 in relation to a matter to which this
10 Division applies.
page 177
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 1 Mergers and transfers of engagements
s. 302
Part 12 -- Merger, transfer of engagements,
winding up
Division 1 -- Mergers and transfers of engagements
302. Application of Division
5 This Division does not apply to a merger or transfer of
engagements to which Part 14 applies.
303. Mergers and transfers of engagements of local co-operatives
Any 2 or more co-operatives may consolidate all or any of their
assets, liabilities and undertakings by way of merger or transfer
10 of engagements approved under this Division.
304. Requirements before application can be made
(1) Before co-operatives can apply for approval under this Division
of a merger or transfer of engagements, the proposed merger or
transfer must have been approved by each of the co-operatives
15 by --
(a) a special resolution passed by means of a special postal
ballot; or
(b) if permitted by subsection (2), a resolution of the board
of the co-operative.
20 (2) The proposed merger or transfer of engagements may be
approved by resolution of the board of a co-operative if the
Registrar consents to that procedure applying in the particular
case.
305. Disclosure statement required
25 (1) A special resolution by which members of a co-operative
approve a merger or transfer of engagements is not effective for
the purposes of this Division unless this section has been
complied with.
page 178
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Mergers and transfers of engagements Division 1
s. 305
(2) Each co-operative must send to each of its members a disclosure
statement approved by the Registrar stating --
(a) the financial position of each co-operative concerned in
the proposed merger or transfer of engagements as
5 shown in financial statements that have been prepared as
at a date that is not more than 6 months before the date
of the statement; and
(b) any interest that any officer of each co-operative has in
the proposed merger or transfer of engagements; and
10 (c) any compensation or other consideration proposed to be
paid, or any other incentive proposed to be given, to any
officer or member of each co-operative in relation to the
proposed merger or transfer of engagements; and
(d) whether the proposal is a merger or transfer of
15 engagements and the reason for the merger or transfer of
engagements; and
(e) in the case of a transfer of engagements, whether it is a
total or partial transfer of engagements; and
(f) other information that the Registrar directs.
20 (3) The disclosure statement must be sent to the members of each
co-operative so that it will, in the ordinary course of post, reach
each member who is entitled to vote on the special resolution
not later than 21 days before the day on or before which the
ballot papers must be returned by members voting in the special
25 postal ballot.
(4) The Registrar may, by order published in the Gazette, exempt a
co-operative from complying with this section.
(5) The Registrar may approve a disclosure statement on any
conditions he or she considers appropriate.
page 179
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 1 Mergers and transfers of engagements
s. 306
306. Making an application
(1) An application for approval of a merger or transfer of
engagements under this Division must be made to the Registrar
in the way and form required by the Registrar.
5 (2) An application for approval of a merger must be accompanied
by 2 copies of the proposed rules of the merged co-operative
and any other particulars required by the Registrar.
307. Approval of merger
(1) The Registrar must approve a merger pursuant to an application
10 under this Division if satisfied that --
(a) this Division has been complied with in relation to the
application; and
(b) the proposed rules of the merged co-operative are
consistent with this Act and may reasonably be
15 approved; and
(c) the certificates of registration of the co-operatives have
been surrendered to the Registrar; and
(d) there is no good reason why the merged co-operative
and its rules should not be registered.
20 (2) On approving an application for merger, the Registrar must --
(a) cancel the registration of the co-operatives involved in
the merger; and
(b) register the merged co-operative and its rules; and
(c) issue to the merged co-operative a certificate of
25 registration under this Act.
(3) A merger takes effect on the issue of the certificate of
registration for the merged co-operative.
page 180
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Mergers and transfers of engagements Division 1
s. 308
308. Approval of transfer of engagements
(1) The Registrar must approve a transfer of engagements pursuant
to an application under this Division if satisfied that --
(a) this Division has been complied with in relation to the
5 application; and
(b) the rules or proposed rules of the transferee co-operative
are adequate; and
(c) in the case of a total transfer of engagements from a
co-operative, the certificate of registration of the
10 co-operative has been surrendered to the Registrar; and
(d) there is no good reason why the transfer of engagements
should not take effect.
(2) A transfer of engagements takes effect on the day specified in
the approval of the Registrar.
15 309. Transfer of engagements by direction of Registrar
(1) The Registrar may, with the approval of the Minister, direct a
co-operative --
(a) to transfer its engagements to a co-operative approved
by the Registrar; and
20 (b) within a period specified by the Registrar when giving
the direction or a further period allowed by the
Registrar, to enter into an agreement approved by the
Registrar to give effect to the transfer of engagements
directed.
25 (2) The Registrar must not give such a direction to a co-operative
unless the necessary grounds exist for the giving of the
direction, as referred to in section 341(2).
(3) The transfer of engagements must make provision, in a way
approved by the Registrar, for the members of the transferor
30 co-operative who wish to do so to become members of the
transferee co-operative.
page 181
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 2 Transfer of incorporation
s. 310
(4) If a co-operative fails to comply with a direction under this
section, the Registrar may elect to treat the failure as the
necessary grounds --
(a) for winding up the co-operative on a certificate of the
5 Registrar; or
(b) for appointing an administrator of the co-operative.
(5) The Registrar must notify the co-operative of the Registrar's
decision under subsection (4).
(6) The Registrar may revoke a direction under this section at any
10 time up until the co-operative has agreed pursuant to the
direction to transfer its engagements.
(7) A transfer of engagements directed under this section takes
effect on a day notified by the Registrar in the Gazette.
(8) An officer of a co-operative must not --
15 (a) fail to take all reasonable steps to secure compliance by
the co-operative with a direction given under this
section; or
(b) by a wilful act or omission be the cause of a failure by
the co-operative to comply with a direction.
20 Penalty: a fine of $2 000.
Division 2 -- Transfer of incorporation
310. Application for transfer
(1) A co-operative, if approved under this Division, may apply to
become registered or incorporated as one of the following
25 corporations --
(a) a company under the Corporations Act;
(b) an incorporated association under the Associations
Incorporation Act 1987;
(c) a corporation that is incorporated, registered or
30 otherwise established under a law that is a law of a place
page 182
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Transfer of incorporation Division 2
s. 311
outside this State and that is prescribed by the
regulations.
(2) For the purposes of subsection (1)(a), an application is to be
made in accordance with the Corporations Act section 601BC
5 for registration as a company under Part 5B of that Act.
(3) For the purposes of the Corporations Act section 601BC(8)(d), a
co-operative is authorised by this Act to transfer its
incorporation.
311. Requirements before application can be made
10 (1) Before an application is made under section 307, the
co-operative must, by special resolution passed by means of a
special postal ballot --
(a) approve the proposed application; and
(b) determine under what name the co-operative is to apply
15 to be incorporated or registered; and
(c) adopt a memorandum or articles of association or
constitution or replaceable rules or rules that may be
necessary or considered desirable.
(2) The name applied for need not be the same as that of the
20 co-operative and must not include the word "co-operative" or
"cooperative" or another word importing a similar meaning.
(3) The regulations may provide that a co-operative is exempt from
compliance with a provision of this section and section 191 in
relation to a matter to which this section applies.
25 312. Meaning of "new body" and "transfer"
The registration or incorporation of a co-operative as a
corporation as a result of an application under this Division is
referred to in this Division as its "transfer" and the corporation
concerned is referred to in this Division as the "new body".
page 183
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 2 Transfer of incorporation
s. 313
313. New body ceases to be registered as co-operative
On the transfer of a co-operative under this Division, it ceases to
be registered as a co-operative under this Act.
314. Transfer not to impose greater liability etc.
5 (1) The memorandum or articles of association or constitution or
replaceable rules or rules adopted for the purposes of the
transfer must not be such as to --
(a) impose on the members of the new body who were
members of the co-operative at the date of transfer any
10 greater or different liability to contribute to the assets of
the new body than the liability to which they were
subject as members of the co-operative; or
(b) deprive a member of the new body of preferential rights
to dividend or capital to which the member was entitled
15 as a member of the co-operative at the date of transfer.
(2) The transfer must result in all persons who were members of the
co-operative at the date of transfer becoming members of the
new body.
(3) In the case of a transfer of a co-operative that has a share capital
20 to a new body that has a share capital, the transfer must result in
every member of the co-operative at the date of transfer who
held shares in the co-operative being the holder of shares in the
capital of the new body equal in number and nominal value to
the shares held by the member as a member of the co-operative.
25 315. Effect of new certificate of registration
A certificate of registration or incorporation as the new body
issued by the appropriate officer under the law applicable to the
new body is evidence that all the requirements of this Division
about registration or incorporation have been complied with.
page 184
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Winding up and deregistration Division 3
s. 316
316. New body must give copy of new certificate of registration
or incorporation to Registrar
On the transfer of a co-operative under this Division, the new
body must immediately give the Registrar a copy of its new
5 certificate of registration or incorporation.
Penalty: a fine of $1 000.
317. New body is a continuation of the co-operative
(1) When a co-operative transfers to a new body, the corporation
constituted by the new body is taken to be the same entity as the
10 corporation constituted by the co-operative.
(2) Without limiting subsection (1), Division 6 applies to a transfer
under this Division.
Division 3 -- Winding up and deregistration
318. Methods of winding up
15 (1) A co-operative may be wound up voluntarily or by the Supreme
Court or on a certificate of the Registrar.
(2) In the case of a winding up voluntarily or by the Supreme Court,
the co-operative may be wound up in the same way and in the
same circumstances as a company under the Corporations Act
20 may be wound up.
319. Winding up on Registrar's certificate
(1) A co-operative may be wound up on a certificate of the
Registrar only if the necessary grounds for taking the action
exist, as referred to in section 341.
25 (2) A winding up on a certificate of the Registrar starts when the
Registrar gives the certificate to the co-operative.
page 185
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 3 Winding up and deregistration
s. 320
(3) On the giving of a certificate, the Registrar may appoint a
person to be the liquidator of the co-operative.
(4) The liquidator need not be a registered liquidator under the
Corporations Act.
5 (5) The liquidator must, within 10 days after appointment, give
notice of his or her appointment in the Gazette.
(6) The liquidator must give the security prescribed by the
regulations and is entitled to receive the fees fixed by the
Registrar.
10 (7) Any vacancy occurring in the office of liquidator is to be filled
by a person appointed by the Registrar.
320. Method of deregistration
A co-operative may be deregistered in the same way and in the
same circumstances as a company under the Corporations Act
15 may be deregistered.
321. Application of Corporations Act to winding up and
deregistration
The winding up or deregistration of a co-operative, and a
deregistered co-operative, are declared to be applied
20 Corporations legislation matters for the purposes of the
Corporations (Ancillary Provisions) Act 2001 Part 3 in relation
to the provisions of the Corporations Act Parts 5.4, 5.4A, 5.4B,
5.5, 5.6, 5.7 and 5A.1, subject to the following modifications --
(a) a reference in the provisions to a special resolution or an
25 extraordinary resolution is to be read as a reference to a
special resolution within the meaning of this Act;
(b) a reference in the provisions to ASIC is to be read as a
reference to the Registrar;
page 186
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Winding up and deregistration Division 3
s. 321
(c) section 513B is to be considered to be amended by
inserting after paragraph (d) --
"
(da) if the winding up is on the certificate of the
5 Registrar -- on the date that the certificate is
given; or
";
(d) section 516 is to be considered to be amended by
inserting after "past member" --
10 "
together with any charges payable by him or her to the
co-operative in accordance with the rules
";
(e) a reference in the provisions to a registered liquidator is
15 to be read as including a reference to a person approved
or appointed by the Registrar as a liquidator of a
co-operative;
(f) a reference in the provisions to the Corporations Act
Part 2F.1 is to be read as a reference to Part 4 Division 5
20 of this Act;
(g) for the purposes of the application of the provisions to a
winding up on the certificate of the Registrar, the
winding up is taken to be a voluntary winding up, but
the Corporations Act section 490 does not apply;
25 (h) the provisions are to be read subject to sections 68
and 327 of this Act for the purposes of determining the
liability of members and former members to contribute
on a winding up of a co-operative;
(i) any other modifications, within the meaning of the
30 Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
page 187
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 3 Winding up and deregistration
s. 322
322. Restrictions on voluntary winding up
(1) A co-operative may be wound up voluntarily only --
(a) by a creditors' voluntary winding up; or
(b) if a special resolution is passed by means of a special
5 postal ballot in favour of voluntary winding up.
(2) A regulation may exempt a co-operative from compliance with
a provision of this section or section 191.
(3) When a special postal ballot referred to in subsection (1)(b) is
held, the members may, by means of the same ballot, by simple
10 majority --
(a) appoint one or more liquidators to wind-up the affairs
and distribute the assets of the co-operative; and
(b) fix the remuneration to be paid to the liquidator.
323. Start of members' voluntary winding up
15 A members' voluntary winding up of a co-operative starts when
the result of the special postal ballot is noted in the minute book
by the secretary of the co-operative.
324. Distribution of surplus -- non-trading co-operatives
(1) In this section --
20 "surplus property" means property of the co-operative that
remains after satisfaction of the debts and liabilities of the
co-operative and the costs, charges and expenses of the
winding up.
(2) On a winding up of a non-trading co-operative, the surplus
25 property of the co-operative must be distributed as required by
the rules of the co-operative.
(3) The rules of a non-trading co-operative must make provision for
the way in which the surplus property of the co-operative is to
be distributed in a winding up.
page 188
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Winding up and deregistration Division 3
s. 325
325. Liquidator -- vacancy may be filled by Registrar
If a co-operative is being wound up voluntarily and a vacancy
occurs in the office of liquidator that in the opinion of the
Registrar is unlikely to be filled in the way provided by the
5 Corporations Act, as applied by this Division, the Registrar may
appoint a person to be liquidator.
326. Review of liquidator's remuneration
A member or creditor of a co-operative or the liquidator may at
any time before the completion of the winding up of the
10 co-operative apply to the Supreme Court to review the amount
of the remuneration of the liquidator.
327. Liability of member to contribute in a winding up where
shares forfeited etc.
(1) If a person's membership of a co-operative is cancelled under
15 Part 6 within 2 years before the start of the winding up of the
co-operative, the person is liable on the winding up to contribute
to the property of the co-operative the nominal value of any
shares forfeited in connection with that cancellation, being their
nominal value immediately before cancellation.
20 (2) If under section 167 a co-operative --
(a) purchases a share of a member in the co-operative; or
(b) repays to a member the whole or any part of the amount
paid up on a share held by a member,
within 2 years before the start of the winding up of the
25 co-operative, the member or former member is liable on the
winding up to contribute to the property of the co-operative the
amount paid by the co-operative to the member or former
member in respect of the purchase or repayment together with
any amount unpaid on the shares immediately before the
30 purchase or repayment.
page 189
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 4 Administration of co-operative -- application of Corporations
Act
s. 328
(3) If a person contributes to the property of a co-operative under a
liability under this section, the amount contributed is, for the
purposes of the winding up, to be treated as having been paid up
by the person on shares of the co-operative.
5 (4) The liability of a member or former member of a co-operative
under this section is in addition to any other liability of the
member or former member to contribute to the property of the
co-operative on a winding up of the co-operative.
Division 4 -- Administration of co-operative -- application of
10 Corporations Act
328. Application of Corporations Act to administration of
co-operative
A co-operative is declared to be an applied Corporations
legislation matter for the purposes of the Corporations
15 (Ancillary Provisions) Act 2001 Part 3 in relation to the
provisions of the Corporations Act Part 5.3A and Part 5.9
Division 3, subject to the following modifications --
(a) the provisions are to be read as if a co-operative were a
company;
20 (b) a reference in the provisions to the Corporations Act
sections 128 and 129 is to be read as a reference to
sections 42 to 44, and section 46 of this Act;
(c) a reference in the provisions to ASIC is to be read as a
reference to the Registrar;
25 (d) any other modifications, within the meaning of the
Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
page 190
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Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Appointment of administrator Division 5
s. 329
Division 5 -- Appointment of administrator
329. Appointment of administrator
(1) The Registrar may, by written notice, appoint an administrator
to conduct the affairs of a co-operative.
5 (2) A notice of appointment must state --
(a) the date of appointment; and
(b) the appointee's name; and
(c) the appointee's business address.
(3) If the appointee's name or business address changes, the
10 appointee must immediately give written notice of the change to
the Registrar.
(4) The Registrar must not appoint an administrator unless the
necessary grounds for taking the action exist, as referred to in
section 341(2).
15 330. Effect of appointment of administrator
(1) On the appointment of an administrator of a co-operative --
(a) the directors of the co-operative cease to hold office; and
(b) all contracts of employment with the co-operative are
terminated; and
20 (c) all contracts for the provision of secretarial or
administrative services for the co-operative are
terminated; and
(d) the administrator may terminate any contract for
providing other services to the co-operative.
25 (2) An administrator of a co-operative has the functions of the
board of the co-operative, including the board's powers of
delegation.
page 191
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Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 5 Appointment of administrator
s. 331
(3) A director of a co-operative must not be appointed or elected
while the administrator is in office except as provided by this
Division.
331. Revocation of appointment
5 (1) An administrator holds office until the administrator's
appointment is revoked.
(2) The Registrar may, by written notice, revoke the appointment of
an administrator.
(3) When a liquidator of a co-operative is appointed, the
10 appointment of any administrator of the co-operative is
automatically revoked.
(4) Immediately on the revocation of an administrator's
appointment, the administrator must prepare and submit a report
to the Registrar showing how the administration was carried
15 out, and for that purpose an administrator has access to the
co-operative's records.
(5) On giving the report and accounting fully for the administration
of the co-operative to the satisfaction of the Registrar, the
administrator is released from any further duty to account for
20 the administration of the co-operative other than on account of
fraud, dishonesty, negligence or wilful failure to comply with
this Act.
(6) Before revoking the appointment of an administrator of a
co-operative, the Registrar must --
25 (a) appoint another administrator; or
(b) appoint a liquidator; or
(c) ensure that directors of the co-operative have been
elected in accordance with the rules of the co-operative
at a meeting called by the administrator in accordance
30 with those rules; or
(d) appoint directors of the co-operative.
page 192
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Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Appointment of administrator Division 5
s. 332
(7) Directors elected or appointed under subsection (6) --
(a) take office on revocation of the administrator's
appointment; and
(b) in the case of directors appointed under subsection (6),
5 hold office until the next annual general meeting of the
co-operative after the revocation of that appointment.
332. Expenses of administration
(1) The expenses of and incidental to the conduct of a
co-operative's affairs by an administrator are payable from the
10 co-operative's funds.
(2) The expenses of conducting a co-operative's affairs include --
(a) if the administrator is not an officer or employee of the
public service, remuneration of the administrator at a
rate approved by the Registrar; or
15 (b) if the administrator is an officer or employee of the
public service, the amount that the Registrar certifies
should be paid to the State as repayment of the
administrator's remuneration.
(3) An amount certified under subsection (2)(b) may be recovered
20 in a court of competent jurisdiction as a debt payable to the
State.
(4) An administrator has, in relation to the expenses referred to in
subsection (1), the same priority on the winding up of a
co-operative as the liquidator of the co-operative has.
25 333. Liabilities arising from administration
(1) If a co-operative incurs loss because of fraud, dishonesty,
negligence or wilful failure to comply with this Act or the rules
of the co-operative by an administrator, the administrator is
liable for the loss.
page 193
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Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 5 Appointment of administrator
s. 334
(2) An administrator is not liable for loss that is not a loss to which
subsection (1) applies but must account for the loss in a report
given under section 331.
334. Additional powers of Registrar
5 (1) If the Registrar appoints directors of a co-operative under
section 331, the Registrar may, by written notice given to the
co-operative, specify --
(a) a time during which this section is to apply in relation to
the co-operative; and
10 (b) the terms on which all or any of the directors hold
office; and
(c) the rules that are to be the co-operative's rules.
(2) While this section applies to a co-operative, the Registrar
may --
15 (a) remove and appoint directors; and
(b) vary, revoke or state new terms in place of all or any of
the terms specified under subsection (1); and
(c) amend all or any of the rules specified under
subsection (1).
20 (3) The Registrar may, by written notice given to the co-operative,
extend the time for which this section is to apply to a
co-operative.
(4) A rule specified by the Registrar under this section to be a rule
of a co-operative --
25 (a) must not be altered except in the way set out in this
section; and
(b) if it is inconsistent with another rule of the co-operative,
prevails over the other rule, and the other rule is to the
extent of the inconsistency inoperative; and
30 (c) has the same evidentiary value as is by this Act accorded
to the co-operative's rules and to copies of them.
page 194
[Draft Bill for public comment]
Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Effect of merger etc. on property, liabilities etc. Division 6
s. 335
335. Stay of proceedings
(1) If the Registrar appoints an administrator to conduct a
co-operative's affairs, a person must not begin or continue
proceedings in a court against the co-operative until the
5 administrator's appointment is revoked except with the leave of
the Supreme Court and, if the Supreme Court grants leave, in
accordance with any terms that the Supreme Court imposes.
(2) A person intending to apply for leave of the Supreme Court
under subsection (1) must give the Registrar at least 10 days
10 notice of intention to apply.
(3) On the hearing of an application under subsection (1), the
Registrar may be represented and may oppose the application.
336. Administrator to report to Registrar
On the receipt of a request from the Registrar, the administrator
15 of a co-operative must, without delay, prepare and give to the
Registrar a report showing how the administration is being
carried out.
Division 6 -- Effect of merger etc. on property, liabilities etc.
337. How this Division applies to a merger
20 (1) This Division applies to a merger of co-operatives under this
Part.
(2) In the application of this Division to a merger --
"new body" means the co-operative that results from the
merger;
25 "original body" means each co-operative that is a party to the
merger;
"relevant day" means the day on which the merged
co-operative is registered under this Act.
page 195
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 6 Effect of merger etc. on property, liabilities etc.
s. 338
338. How this Division applies to a transfer of engagements
(1) This Division applies to a transfer of the engagements of a
co-operative to another co-operative under Division 1.
(2) In the application of this Division to a transfer of
5 engagements --
"new body" means the co-operative to which the engagements
are transferred;
"original body" means the co-operative that transfers its
engagements;
10 "relevant day" means the day on which the transfer of
engagements takes effect.
339. How this Division applies to a transfer of incorporation
(1) This Division applies to a transfer of incorporation under
Division 2.
15 (2) In the application of this Division to such a transfer --
"new body" means the corporation that results from the
transfer;
"original body" means the co-operative that transfers its
incorporation;
20 "relevant day" means the day on which the transfer takes
effect.
340. Effect of merger etc. on property, liabilities etc.
(1) In this section --
"assets" means any legal or equitable estate or interest (whether
25 present or future and whether vested or contingent) in real
or personal property of any description (including money),
and includes securities, choses in action and documents;
"instrument" means an instrument (other than this Act) which
creates, modifies or extinguishes rights or liabilities (or
30 would do so if lodged, filed or registered in accordance
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Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Effect of merger etc. on property, liabilities etc. Division 6
s. 340
with any law), and includes any judgment, order and
process of a court;
"liabilities" means liabilities, debts and obligations (whether
present or future and whether vested or contingent).
5 (2) On and from the relevant day for an event to which this
Division applies --
(a) the assets of the original body vest in the new body
without the need for a conveyance, transfer, assignment
or assurance; and
10 (b) the rights and liabilities of the original body become the
rights and liabilities of the new body; and
(c) all proceedings by or against the original body that are
pending immediately before the relevant day are taken
to be proceedings pending by or against the new body;
15 and
(d) an act, matter or thing done or omitted to be done by, to
or in relation to the original body before the relevant day
is, to the extent to which that act, matter or thing has any
force or effect, taken to have been done or omitted by, to
20 or in relation to the new body; and
(e) a reference in an instrument or document of any kind to
the original body is to be read as, or as including, a
reference to the new body.
(3) The operation of this section must not be regarded --
25 (a) as a breach of contract or confidence or otherwise as a
civil wrong; or
(b) as a breach of any contractual provision prohibiting,
restricting or regulating the assignment or transfer of
assets, rights or liabilities; or
30 (c) as giving rise to a remedy by a party to an instrument, or
as causing or permitting the termination of an
instrument, because of a change in the beneficial or legal
ownership of an asset, right or liability.
page 197
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 12 Merger, transfer of engagements, winding up
Division 7 Miscellaneous
s. 341
Division 7 -- Miscellaneous
341. Grounds for winding up, transfer of engagements,
appointment of administrator
(1) This section applies to the following actions --
5 (a) a direction by the Registrar to a co-operative to transfer
its engagements under section 309;
(b) the appointment of an administrator of a co-operative
under Division 5;
(c) the winding up of a co-operative on a certificate of the
10 Registrar under section 319.
(2) The necessary grounds for taking action to which this section
applies exist if the Registrar certifies that --
(a) the number of members is reduced to less than the
minimum number of persons allowed under section 66;
15 or
(b) the co-operative has not commenced business within
one year of registration or has suspended business for
more than 6 months; or
(c) the registration of the co-operative has been obtained by
20 mistake or fraud; or
(d) the co-operative exists for an illegal purpose; or
(e) the co-operative has wilfully, and after notice from the
Registrar, violated the provisions of this Act or of the
rules of the co-operative; or
25 (f) the board of the co-operative has, after notice from the
Registrar, failed to ensure that the rules of the
co-operative contain active membership provisions in
accordance with Part 6; or
(g) there are, and have been, for one month immediately
30 before the date of the Registrar's certificate, insufficient
directors of the co-operative to form a quorum in
accordance with the rules of the co-operative; or
page 198
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Co-operatives Bill 2006
Merger, transfer of engagements, winding up Part 12
Miscellaneous Division 7
s. 342
(h) after an inquiry under this Act into the affairs of a
co-operative or the working and financial condition of a
co-operative, that in the interests of members or
creditors of the co-operative or the public the action
5 concerned should be taken.
(3) Alternatively, the necessary grounds for winding up a
co-operative on a certificate of the Registrar exist if the
Registrar certifies that --
(a) the period, if any, fixed for the duration of the
10 co-operative by its rules has ended; or
(b) an event, to be specified in the certificate, has occurred
on the occurrence of which the regulations or the rules
provide that the co-operative is to be wound up.
(4) The Registrar must not certify under this section as to any
15 matter unless the matter has been proved to the Registrar's
satisfaction.
342. Application of Corporations Act for insolvent co-operatives
A co-operative is declared to be an applied Corporations
legislation matter for the purposes of the Corporations
20 (Ancillary Provisions) Act 2001 Part 3 in relation to the
provisions of the Corporations Act Part 5.7B, subject to the
following modifications --
(a) the provisions are to be read as if a co-operative were a
company;
25 (b) a reference in the provisions to a provision of the
Corporations Act sections 286 to 290, as applied under
section 230 of this Act, is to be read with any
modifications prescribed by the regulations;
(c) any other modifications, within the meaning of the
30 Corporations (Ancillary Provisions) Act 2001 Part 3,
that are prescribed by the regulations.
page 199
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 13 Arrangements and reconstructions
Division 1 General requirements
s. 343
Part 13 -- Arrangements and reconstructions
Division 1 -- General requirements
343. Requirements for binding compromise or arrangement
(1) A compromise or arrangement is binding only if it is approved
5 by order of the Supreme Court after having been agreed to --
(a) if the compromise or arrangement is between the
co-operative and any of its creditors, at a court ordered
meeting by a majority in number of the creditors
concerned who are present and voting (in person or by
10 proxy), being a majority whose debts or claims against
the co-operative amount to at least 75% of the total of
the debts and claims of all those creditors who are
present and voting (in person or by proxy); or
(b) if the compromise or arrangement is between the
15 co-operative and any of its members, by the members
concerned, by special resolution passed by means of a
special postal ballot.
(2) The court ordered meeting referred to in subsection (1)(a) is a
meeting called in accordance with an order of the Supreme
20 Court under this Part.
(3) The Supreme Court may grant its approval to a compromise or
arrangement subject to the alterations or conditions it considers
appropriate.
(4) An order of the Supreme Court approving a compromise or
25 arrangement does not have effect until an office copy of the
order is lodged with the Registrar.
(5) On the copy being lodged, the order takes effect from the date
of lodgment or an earlier date the Supreme Court specifies in
the order.
page 200
[Draft Bill for public comment]
Co-operatives Bill 2006
Arrangements and reconstructions Part 13
General requirements Division 1
s. 344
344. Supreme Court ordered meeting of creditors
(1) In this section --
"appropriate person" , in relation to an application for an
order, means --
5 (a) the co operative; or
(b) a member of the co operative; or
(c) one of the creditors concerned; or
(d) in the case of a co-operative being wound up, the
liquidator.
10 (2) If a compromise or arrangement is proposed between a
co-operative and any of its creditors, the Supreme Court may on
application by an appropriate person order a meeting or
meetings of the creditors concerned.
(3) The meeting must be convened in the way and be held in the
15 place or places, in this State or elsewhere, that the Supreme
Court directs.
(4) In considering whether to make an order for a meeting to be
held in another jurisdiction, the Supreme Court may have regard
to where creditors concerned reside.
20 345. Registrar to be given notice and opportunity to make
submissions
(1) The Supreme Court may, on the application of an appropriate
person as defined in section 344(1), make an order under this
Division approving a compromise or arrangement if the Court is
25 satisfied that --
(a) at least 14 days notice of the hearing of the application
for the order, or a shorter period of notice the Court or
the Registrar permits, has been given to the Registrar;
and
page 201
[Draft Bill for public comment]
Co-operatives Bill 2006
Part 13 Arrangements and reconstructions
Division 1 General requirements
s. 346
(b) the Registrar has had a reasonable opportunity to
examine --
(i) the terms of that compromise or arrangement;
and
5 (ii) the explanatory statement to be sent to creditors
or members under section 354,
and make submissions to the Court.
346. Results of 2 or more meetings
If the Supreme Court orders 2 or more meetings of creditors to
10 be held in relation to a proposed compromise or arrangement --
(a) the meetings are taken to form a single meeting; and
(b) the votes in favour of the proposed compromise or
arrangement cast at each of the meetings are to be
added; and
15 (c) the votes against the proposed compromise or
arrangement cast at each of the meetings are to be
added.
347. Persons disqualified from administering compromise etc.
(1) Except with the leave of the Supreme Court, a person must not
20 be appointed to administer, and must not administer, a
compromise or arrangement approved under this Act between a
co-operative and any of its creditors or members, whether by the
terms of the compromise or arrangement or under a power given
by the terms of a compromise or arrangement, if the person --
25 (a) is a mortgagee of property of the co-operative; or
(b) is an auditor or an officer of the co-operative; or
(c) is an officer of a corporation that is a mortgagee of
property of the co-operative; or
(d) is not a registered liquidator under the Corporations Act
30 unless the person is a corporation authorised by or under
page 202
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Co-operatives Bill 2006
Arrangements and reconstructions Part 13
General requirements Division 1
s. 348
a law of this State to administer the compromise or
arrangement concerned; or
(e) is an officer of a corporation related to the co-operative;
or
5 (f) unless the Registrar directs in writing that this paragraph
does not apply in relation to the person in relation to the
co-operative, has at any time within the last 12 months
been an officer or promoter of the co-operative or of a
related corporation of the co-operative.
10 348. Application of Schedule 4 to person appointed
Schedule 4 clauses 16, 18(2) and (4), 19, 23 and 25 apply to a
person appointed to administer a compromise or arrangement as
if the appointment were an appointment of the person as a
receiver and manager of property of the co-operative and as if a
15 reference to a receiver were a reference to that person.
349. Application of Corporations Act to person appointed
A person appointed to administer a compromise or arrangement
is declared to be an applied Corporations legislation matter for
the purposes of the Corporations (Ancillary Provisions)
20 Act 2001 Part 3 in relation to the Corporations Act section 536
as if --
(a) the appointment were an appointment as a liquidator of
the co-operative; and
(b) a reference in the section to a liquidator were a reference
25 to that person; and
(c) a reference in that section to ASIC were a reference to
the Registrar.
350. Copy of order to be attached to rules
(1) A co-operative must ensure that a copy of an order of the
30 Supreme Court approving a compromise or arrangement is
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Co-operatives Bill 2006
Part 13 Arrangements and reconstructions
Division 1 General requirements
s. 351
attached to each copy of the rules of the co-operative issued
after the order is made.
Penalty: a fine of $2 000.
(2) The Supreme Court may, by order, exempt a co-operative from
5 compliance with this section or determine the period during
which the co-operative must comply.
351. Directors to arrange for reports
(1) When a compromise or arrangement (whether or not for the
purposes of or in connection with a scheme for the
10 reconstruction of a co-operative or the merger of any 2 or more
co-operatives) has been proposed, the directors of the
co-operative must --
(a) if a meeting of the members of the co-operative by
resolution so directs, instruct the accountants or
15 solicitors or both named in the resolution to report on
the proposals and send their report or reports to the
directors as soon as practicable; and
(b) make any report or reports so obtained available at the